Do the math
After writing the post about my annual nenkin update, I was reminded that I was not fully paid up and thought it would be a good chance to do some digging and maybe get some blog post fodder.
I found out that it is possible to backpay kokumin nenkin up to five years for unpaid portions, and up to ten years for partial payments.
My partial payments were nine years ago, so I am just in time to pay them if I decide to do so (this is entirely voluntary at this point) :)
I called up my local office nenkin office (I would recommend doing this instead of talking to the people in the local ward/city office who frequently aren't up to speed) and asked about my options.
It turns out you can do everything by mail, so I downloaded the necessary paperwork and then asked a few questions to see if it would be worth my while to pay.
The very pleasant officer told me they couldn't calculate things exactly over the phone, but each month paid in full would result in a something like 1,600 yen a year increase to your pension.
In my case I paid 1/4 of the pension payments (3/4 免状 menjou, or waiver), so I would get an extra 1,200 yen a year for each top up payment.
My payments were six months in H.20 so as you can see in the table I would have to pay 11,370 yen per month to top it up.
But is it worth my while to do so?
The total payment would be 68,220 yen. This would increase my eventual pension by approximately 7,200 yen a year.
Barring changes to the pensionable age in Japan, I will be able to claim my pension from age 65. Optimistically I will live at least twenty years beyond this, so I will receive an extra 144,000 yen in pension income by making the payment.
However, I could also invest the 68,000 yen. Assuming a reasonable return of 5% above inflation I can see it quadrupling to around 240,000 yen by the time I am seventy years old. Coincidentally, assuming a yield of about 3% in dividends, it would provide me with 7,200 yen a year in income, and I would still have the principal.
So in this case it seems to make more sense for me to keep the money and invest it myself. The combined pension for my wife and me should be over 200,000 yen anyway, which is a safe enough baseline for us to live off. Any extra funds I will put into our investment accounts instead.
How about you? Have you looked into topping up your pension? What's your plan for retirement income?