A "conversation" with Desmond P.
A new type of blog post for you today. This is a slightly edited version of an email exchange I had with Desmond P. a couple of months ago about the pension system here. Read on if you want some early Halloween chills :)
"Just had a really terrifying encounter, which I thought to share with you and the wider community.
Now, I am sure that everyone in the Retire Japan community has been paying their pensions dutifully, regardless of whether it is the basic, employer or public sector pensions.
Once a year on one's birth month, a seemingly innocuous postcard will arrive in the mailbox, detailing pension contributions for the past 12 months. Using the information contained in this postcard, we can register for an account on the Japan Pension Service's website.
About a week later, another postcard containing the user ID will arrive, thereby allowing one to login and check the expected pension payout upon reaching retirement age. So I went in and did the following:
- Entered my current monthly salary and bonuses
- Chose the options to delay withdrawal up to the maximum allowed (75 years old)
This is what I got:
Nothing short of absolutely horrifying to say the least. Not even 40% of my current income will be replaced by the corporate pension scheme which I am enrolled in. In fact, it is not even enough for subsistence even though the corporate scheme has higher payouts than the basic scheme.
Hopefully the readers, especially those who have been putting off investing for their own retirements, will also do the same and take action."
"I hadn't noticed that function on the nenkin website before, but playing with it just now really underestimates my benefits.
I have a rough estimate for my wife and myself as receiving 2.4m a year from 65 under the current rules (I predict we'll actually receive a lot less) but the calculator is throwing out 800,000 a year!
I think the fact that a lot of my contributions are kyosai nenkin and thus don't show up in the system is throwing it off.
Pretty depressing stuff though, at least it would be if I was expecting Japan's pension office to take care of me ;)
I am expecting to receive 0 yen as my pension, anything above that will be a pleasant surprise.
I think a lot of people are going to get an unpleasant surprise though.
Either way, it's completely out of my control."
"You have got to be kidding me. ¥800,000 annually under the public sector pension? Wow a lot of people will be in for a very nasty surprise after retirement, if they did not prepare during their working years.
Let's us hope that the system is not calculating the payouts correctly, so that we get a much more pleasant surprise ;)"
"I'll be pleasantly surprised when I have my pension payments in my hand, not before ;)"
How about you? Are you paying into a pension scheme? Have you looked at the projected payouts?