A question from a reader:
I am a worker of African origin in Japan, employed as a software engineer on an engineer’s working visa.
I have passed my three-year point here and now find myself among the legions of “double-punished” workers in Japan.
What do you think can be done or what is the current state of discussions about the possibility of getting at least a percentage of all we are paying toward our pension every year? For your information, I am paying almost ¥50,000 per month.
Because my country does not have a bilateral pension agreement with Japan, I will not be able to carry my contributions over to a pension in my country and will not be able to claim any money I pay toward the Japanese pension after the three-year point, since the law says it is only possible to claim 36 months’ worth. This is what I mean when I say I’m being double-punished.
In Japan, all residents between 20 and 59 years old are required to enter a national pension program. If you work for a company, you may be covered by an employees’ pension program.
Under the current law, you will be able to receive a pension at retirement age after paying contributions for 300 months — exactly 25 years. So what happens to your pension if you leave Japan before you have contributed for a quarter of a century?
If you are from a country that has signed a bilateral social-security agreement with Japan — that is, Germany, the U.S., Belgium, France, Canada (except Quebec), Australia, the Netherlands, the Czech Republic, Spain, Ireland, Brazil, Switzerland and Hungary — the period you have been paying into the pension program in Japan may be deemed equivalent to the same coverage period in your country. This effectively means that you can “carry over” the amount of time you have been covered in Japan to the pension program in your home country. For the specifics in your country’s case, please consult with your embassy.
If you are from a country with no such agreement, like the reader above, you should be able to claim a lump-sum withdrawal payment if your pension coverage lasted six months or longer. To be precise, there are four conditions that you must meet to be able to apply for the lump-sum payment, namely:
1) You are not a Japanese citizen.
2) You paid into an employees’ pension scheme (kōsei nenkin) or the national pension system (kokumin nenkin) for at least six months. (In the case of the national pension, if you were exempt from 25 percent of the full contribution, only three-quarters of the months you worked will count toward this six-month threshold, meaning you would have to work eight months to qualify. Similarly, you have to have worked for 12 months to qualify if you were paying only half the full contribution, and 24 months if you were paying only 25 percent.)
3) You are not resident in Japan. (At your local municipal office, you need to submit notification of your change to an overseas address and, in the case of the national pension, a form explaining why you no longer qualify for the pension scheme.)
4) You have never been entitled to any Japanese public pension and have never drawn on the disability allowance.
Here is the form you need to fill in to apply for the lump-sum withdrawal payment: www.nenkin.go.jp/n/open_imgs/service/0000019735Jtb6lIblfc.pdf.
If you were under the national pension system for 36 months and the final contribution was paid in August 2014, for example, the lump-sum amount you can expect to receive is ¥274,500. If you were paying into the employees’ pension system, the amount is calculated according to a formula based on your average income that is explained thoroughly in the PDF.
Under both systems, your lump-sum withdrawal payment is based on your coverage period up to 36 months. Even if were paying into the system for 37 months or longer, the period beyond 36 months won’t count. Your total coverage period will also no longer count toward any further benefits once you have received the lump-sum payment. On this point, the reader’s understanding about the lump-sum payment is spot on.
However, there is potentially good news on the horizon regarding pension eligibility. As stated above, as things stand now, you need to pay premiums for 25 years to qualify for pension payouts after retirement. However, this period is supposed to be cut down to 10 years (120 months) in October 2015. In other words, if the reader stays in Japan and pays into the system for another seven years, he would be eligible to receive Japanese pension payments when he hits retirement age, even if he lives outside the country — albeit at a much lower rate than if he ends up working here for 25 years in total, of course.
It is worth noting, though, that this reform is inextricably linked to the proposed raising of the consumption tax to 10 percent, also in October 2015. Without the hike in the consumption tax to pay for the pension reforms, the change to a 10-year minimum pay-in period before your pension pays out is unlikely to happen. With that in mind, I imagine there will be a number of non-Japanese residents hoping the consumption tax hike goes through as planned next year — even though it will hit them in the pocket in the short term.
Masami Kittaka is an attorney with the Foreigners and International Service Section at Tokyo Public Law Office, which handles a wide range of cases involving foreigners in the Tokyo area (www.t-pblo.jp/fiss; 03-6809-6200). FISS lawyers address readers’ queries once a month. Questions: firstname.lastname@example.org