I screwed up
We wrote about nenkin kikin and fuka nenkin a couple of months ago. Basically they are two schemes kokumin nenkin payers can use to increase their eventual pension payouts (which will be much lower than kosei nenkin payers' ones).
Payments into both nenkin kikin and fuka nenkin are tax deductible, using the same allowance as iDeCo.
I think for many people iDeCo will be a better option, but looked into fuka nenkin for my wife.
Mathematically, it seems like a good deal. You pay an extra 400 yen a month into kokumin nenkin, and your annual pension in retirement goes up by 200 yen for every monthly payment of 400 yen.
Essentially, you are buying a 200 yen a year annuity backed by the Japanese government with every 400 yen monthly payment. Of course, inflation will likely reduce the value of this by the time you get it, but it's still a good deal.
So if you pay into fuka nenkin for 40 years (480 payments of 400 yen) you will end up paying a total of 192,000 yen. In return your annual pension will be increased by 96,000 yen. You 'break even' after two years, and make a 'profit' after that. You could arguably do better investing the money, but the benefit of an annuity like this is that it is paid for as long as you live. It's a great deal, albeit for a small amount of money.
I talked to the nenkin desk at our ward office (I know, I know, I should have learned by now not to do that) and they said that as my wife was already paying the full 68,000 yen per month into iDeCo, she would still be able to pay fuka nenkin but it wouldn't be tax-deductible.
Sounded okay, so we filled in the paperwork and submitted it.
About a month later we got a letter from Nomura, who run the iDeCo scheme for Iwate Bank, my wife's provider. It said they were stopping withdrawals as the combined iDeCo and fuka nenkin payments were over the montly limit of 68,000.
To restart withdrawals, we would have to reduce my wife's monthly iDeCo contribution to 67,000 yen a month, or stop the fuka nenkin contributions. The paperwork would take a couple of months, so we will lose the iDeCo contribution for those months.
I was livid. Due to the person I consulted in the ward office not knowing what they were talking about we ended up losing out financially and having to run around filling in paperwork. It's all done and sent off now, so hopefully withdrawals will start up again from November.
One important lesson can be learned from this though. Never talk to the pension people at the ward office or city hall. Instead call the pension office or the national helplines. They are far more likely to be able to give you accurate information. This is the third or fourth time something like this has happened, so I should really know better by now.
How about you? Anyone else using nenkin kikin or fuka nenkin? Any other interesting schemes we should be looking into?