Very informative for the first time
My pension update (年金定期便) arrived this week. It's sent out once a year, around your birthday. This is the first update I have received since the law was changed to allow us to vest in ten years instead of twenty-five.
Accordingly, it now shows how much pension I would be entitled to according to what I have paid in so far, and presuming the rules don't change in the future.
I think it best to consider this a rough estimate and not become too attached to the figures.
Still, it's quite reassuring. The data is as of April this year, and I had paid in for just under seventeen years at that point:
- 93 months of kosei nenkin (from when I was working for the Sendai and Miyagi boards of education),
- 12 months of kokumin nenkin (from when I was between jobs and working part-time -most of this was at a reduced rate),
- and 97 months of kyosai/public servant nenkin (now folded into kosei nenkin with a little something on top).
A total of 202 months of eligibility, comfortably over the 120 currently needed to vest and receive a pension. You can see all this information in Section 1 in the photo above.
Section 2 shows the projected annual pension payouts, as well as the total contributions I have made.
So based on my contributions so far, I will receive 323,084 yen a year from kokumin nenkin, 182,875 yen a year from kosei nenkin, and 282,445 yen a year from kyosai nenkin, for a total pension of 788,404 yen a year. This is just over the maximum annual payout for kokumin nenkin, which is currently 779,300 (based on paying in for the maximum 40 years).
Looking at the amount I have paid in, at first glance kokumin nenkin seems to be an amazing deal, yielding an annual pension of 323,084 yen from just 97,250 yen contributed. However, this ignores the fact that paying into kosei or kyosai nenkin also includes the basic kokumin nenkin payment, so in fact I have paid 202 months into kokumin nenkin and that is reflected in the amount of pension due.
Also, 97,250 is nowhere near 12 months' of kokumin nenkin payments. This is because I successfully applied for a waiver of some of my payments due to low and unstable income (I was not renewed at my job and had to get by on part-time work for a year before finding my current full-time position). This is a relatively simple procedure you can do at your local pension or ward/city office and is better than not paying as it still gives you eligibility towards vesting.
I have mixed feelings about the 6,463,359 yen I have paid into the system. On the one hand, if I were able to get a refund and invest that money now for the next thirty years, I think I would have a good chance of doing better than my projected payout (factoring in both yield and principal).
On the other hand, recently arrived in Japan 22-year old me would not have set money aside for retirement, lacking both the knowledge and the discipline to do so, so the compulsory saving represented by the pension is better than nothing. I suspect this is the case for many people.
Another benefit of the government pension is that it provides diversification from my other investments, insurance against longevity risk, and simplicity as I get older and less able to manage my investments. That is one reason I have also applied to pay into the UK pension scheme on a voluntary basis.
Having a regular payment from the government is worth a lot, especially if you become frail or lose your mental faculties.
I can imagine making another 5 years of kyosai nenkin payments, and then about 16 years of kokumin nenkin, on top of what I have paid in already.
My wife will have about 40 years of contributions once she is done (split between kosei nenkin, kokumin nenkin, and the freebie for being a dependent spouse). She's also paying fuka nenkin, which will increase her eventual pension amount slightly.
200,000 yen a month between us once we are both claiming seems to be a reasonable (slightly pessimistic) estimate, and will give us a nice income floor. We shouldn't starve, at least ;)
I imagine a lot of people will be getting these estimates this year now that we are all vesting after ten years. How's your pension situation? Any questions?