Under-30s short of cash can defer their Japan pension payments

Japan sets aside the second Monday in January as a public holiday to celebrate seijinshiki (coming of age) for young adults. This year anyone turning 20 between April 2, 2014, and April 1, 2015, was eligible to dress up and participate in the festivities.

Twenty not only marks the age when young Japanese can legally smoke, drink and vote (although the minimum voting age is likely to be lowered to 18 from next year), but it is also when the government asks them to start paying into the national pension scheme (kokumin nenkin). This week’s question comes from JS, the parent of a Japanese national studying overseas:

Our 20-year-old daughter, who has Japanese citizenship, is currently studying abroad. The local city office sent her a letter telling her to sign up to start paying the pension, and then they sent her nenkin techō (pension booklet). We don’t know where she will end up living and working at this stage. On the other hand, just in case she does want to come back and live here in the future, we don’t want her to be delinquent in the system.

I understand you can defer payment. Can you explain?

The official line is that anyone residing in Japan aged 20-59 must sign up for the national pension scheme. However, there are two options for deferral for young people with little or no income:

1) Students studying at a Japanese institution

In general, those in post-secondary education in Japan can apply under the deferred-payment option for students, gakusei nōfu tokurei seido. Japanese nationals studying overseas can apply if they are enrolled at a Japanese institution and are participating in something like a semester abroad or another overseas studies program through their Japanese university.

However, since proof of enrollment at a Japanese university must be provided as part of the application, those enrolled at overseas colleges can’t take advantage of this option.

2) Young people under age 30

Anyone else under 30 can apply for deferral based on the assumption that they are “low income youth” (as one page in English on the Japanese pension scheme website calls them). This option is called the jakunensha nōfu yūyo seido.

Applicants for this option may still be living with their parents but their income will be considered independent of that of their parents and any other members of the household when they apply. The exception is a spouse, in which case both partners’ income will be taken into account when the application is made. If a Japanese national studying abroad at a foreign university wants to defer payments, this is the option to use.

While the two systems require different paperwork, they basically work the same way: Those enrolling in the systems can start getting credit toward the (current) 25-year minimum required to qualify for a pension down the road. (Naturally, upon retirement his or her overall pension payouts would be less than those for someone who had been paying for the whole period.) They can also still qualify for disability insurance (shōgai nenkin) should they need it.

A parent can apply for deferral on behalf of their son or daughter, but as the young person is 20 and a legal adult, the process involves having written authorization stamped with the progeny’s personal seal (hanko). (If this is problematic, the representative I spoke to on the pension service’s helpline advised getting the paperwork from the pension section at your local city office and then sending it in by snail mail.) Basically, applicants need to renew every year, but there is a box to check that allows “automatic renewal.”

Japanese residents registered as living abroad have the option of choosing whether or not they want to pay into the pension system while they are out of the country. While researching this topic, I spoke to other bicultural families with a son or daughter studying abroad like reader JS. In cases where the student has enrolled at an overseas institution, some parents have chosen to free their child from the whole process of pension payments by changing their official residential address to their overseas one. This involves changing the details on the child’s certificate of residence (jūminhyō) in Japan.

Whether or not to pay into the pension system is obviously a personal choice. The whole structure of the current pension is based on the principle that today’s workers support the current crop of retirees. The underlying assumption that future generations will then support our retirement doesn’t seem very well-founded in view of the decreasing population and the difficulties finding steady employment that many young people face these days.

However, as things stand, at least young people can buy themselves time by enrolling in the system without having to make payments and not being penalized. For a young Japanese national who isn’t sure of where they will eventually settle for work, this may be a safe option to choose. If JS’s daughter wants to remove herself from the system entirely while she is overseas, then she (or they) should change her address on the jūminhyō).

Japan Pension Service website (English): Helpline (Japanese): 0570-05-1165. Kiwi Louise George Kittaka has been based in Japan since she was 20. In the ensuing years she has survived PTA duty for three kids in the Japanese education system and singing live on the NHK “Nodo Jiman” show, among other things. Your comments and questions:

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