Sunday, June 23, 2013

Japanese Pension

The pension system here is rather difficult for a foreigner like me to understand. I recently attended a free seminar hosted by the Sapporo International Communication Plaza Foundation to try to learn about it.  Every person (including non-Japanese) between the ages of 20 and 59 living in Japan, is required to pay into the pension system unless that person receives an exemption or is paying into the company pension system. If you work and pay at least 25 years, you qualify to receive old age pension payment. To receive the full monthly retirement benefit in the National Pension System, you have to contribute for 40 years, less years means less payment.  I learned that Japan has totalization agreements with some countries, including the US, to combine the number of years paid into the systems in each country, in order to receive benefits, but I don’t really understand how that works.

If you are a foreigner and work and pay at least six months, you can get a lump sum payment back of a fraction of what you paid in. (Maximum is a fraction of what you paid in for three years, no matter how many years more than three you paid in.)  You have to apply with documentation after you no longer have a residence in Japan and no later than two years after leaving, but if you do that, those years are no longer considered toward the minimum number of years you need to receive the old age payments.

As with Social Security in the US, people wonder if they will really get payments when they are old enough. With people living longer and fewer young people paying into the system, it is a concern. The average lifespan in Japan is 83 (86 for women and 79 for men).  One article I read said (jokingly, I think) salary men in Japan are not included in calculating the average lifespan because they drink so much that their lifespan is shortened.

I seem to know less about the whole thing now than before I went to the seminar, but maybe learning a little about it makes me think of more questions. I may be wrong, but it seems like most foreigners don’t get the benefit of what they pay in, so it’s more of a tax than an investment for old age.  Many of the foreigners I meet here seem to be here for less than five years (such as English teachers). Let’s say you live here four years teaching English and pay into the system.  When you leave, if you properly fill out the forms, you could get a part of what you paid in for three years back. I’d bet that a good percentage of the young English teachers who leave don’t even apply.  Ted and I are required to pay into the system, but even if we stayed here the rest of our lives, we aren’t going to benefit.  There aren’t enough years for us to work and pay in for 25 years (let alone 40 to get the full benefit) and we have already worked enough in the US to receive Social Security when we are old enough, so we don’t need to add the years for the totalization agreement.  If we do go back to the US after five years, at most we could get back a fraction of what is paid in for the three years.

Maybe they’ll offer another seminar so I can learn more about it.

Birthday Month Continues
Ted's students made him a birthday cake and had an impromptu party in his office.


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