JPN-Journal.com News/Laws for Foreigners Working in Japan.

What is National Pension?

Overview

National Pension is a public pension system designed to provide old-age pension, disability pension, and survivors' pension, collectively referred to as "Basic Pension", to all Japanese citizens and legal residents satisfying the required coverage period. Basic Pension serves as the fundamental basis of Japan's pension system in which other publicly managed pensions, such as the Employees' Pension Insurance system, are built on top of.

National Pension is managed by the Japanese government, specifically the Ministry of Health, Labour, and Welfare. Daily tasks are administered by a designated division within the offices of municipal governments.

Enrollment

All citizens and legal residents of Japan over the age of 20 must enroll in the system. Enrollment into the system differs depending on your category which is determined by your status.

Category 1
If you are self-employed, independent contractor, student, or a dependent of any one of these, you will fall into what is known as Category 1. It is your resonsibility to enroll in the National Pension system at your local municipal government office.

Category 2
If you are a corporate employee, you will fall into what is known as Category 2. Your employer, specifically the human resource group, will enroll you in the National Pension system together with your enrollment into the Employees' Pension Insurance system.

Category 3
If you are a dependent of a corporate employee enrolled in National Pension as Category 2, you will fall into what is known as Category 3. The employer of the corporate employee, specifically the human resource group, will enroll you in the National Pension system.

Insurance Premium Rate

Premium for National Pension is payable every month. For the fiscal year 2006, monthly premium is 13,860 yen. Premiums are subject to increase annually. Options exist to pay premiums in advance, usually for 6 months or for the whole year. Discount rate applies for advance payments.

Premium payments may be made at banks, post offices, and convenience stores using the payment notices sent to you from the Social Insurance Agency.


What is Employees' Pension Insurance?

Overview

Employees' Pension Insurance is a workplace-based public pension system designed to provide additional pension on top of the Basic Pension provided by National Pension. Additional pension amounts depends on your earnings during your enrollment period.

Enrollment

Due to the workplace-based nature of the insurance, the business enterprise itself must first register with the Social Insurance Office with jurisdiction over its location of business before its employees can enroll in the system.

The following business enterprises are required to register by law:

(1) Non-incorporated businesses with more than five employees, and (2) Incorporated businesses.

Therefore, employees at these business enterprises are automatically enrolled in the Employees' Health Insurance from day 1 of their employment.

Insurance Premium Rate

If you're enrolled in Employees' Health Insurance and Employees' Pension Insurance, your health and pension insurance contributions are equally shared by you and your employer. Your share of contribution is deducted from your paycheck and your employer matches your contribution amount.

Required contribution amount is calculated as = Standard Monthly Remuneration* x Contribution rate**

* Standard Monthly Remuneration serves as the basis for calculating the benefits and insurance contributions for Employees' Health Insurance and Employees' Pension Insurance. Your total monthly compensation is matched against the prescribed remuneration table (below) to determine your "Standard Monthly Remuneration". Your remuneration includes payments such as salary, wage, and any allowance you receive from your employer in return of your service performed.

** Contribution rate for the Government-managed Health Insurance is 82/1000. If you are aged 40 or over but under 65, the contribution rate is 94.3/1000 including the contribution for Long-term Care Insurance. Contribution rate for Employees' Pension Inurance is 14.289%.

2007 Standard Remuneration Table


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National Pension Benefits

- Old-Age Basis Pension
- Disability Basic Pension
- Survivors' Basic Pension
- Widow's Pension
- Lump-Sum Death Benefit
- Lump-Sum Withdrawal Payments

Lump-Sum Withdrawal Payments

The Lump-Sum Withdrawal Payments is available exclusively for non-Japanese citizens. Claim must be filed within 2 years after you depart Japan or your entitlement to the benefit will expire.

The Lump-Sum Withdrawal Payment can be claimed only after you depart Japan, and only if you have a coverage period of at least 6 months as a Category 1 insured individual under the National Pension system. In addition, it is required that you have not received any pension benefits under the system.

It is important to note that if you receive the Lump-Sum Withdrawal Payment based on your coverage period, you can not apply those periods for the totalization benefit under the Social Security Agreement between other countries. Therefore, if you are a citizen of a country with which Japan has a Totalization Agreement, you should thoroughly consider whether you would like to claim the benefit now under the Japanese system or to defer the benefits under the pension system in your home country. It is advisable to consult your Certified Social Insurance and Labor Consultant to determine which will provide you with more benefits.

Amount of benefit depends on your coverage period. If your last premium was paid for the month of March 2007 and before, your Payments amount is as follows: