Japan provides all of its workers with a long-term savings programme that insures their pensions after retirement.
Every Japanese employee pays around 8% of their salary towards pension insurance, and every employer adds to that amount with a matching percentage of the employee´s salary (a total of 16%). Retirement taxes are expected to increase to a total of 18.3% in 2017 (the sum will continue to be equally split between the employer and the employee). This money is received upon old age (workers retire at 60 years of age), serious illness (illness renders the worker unemployable) or death (pension is paid to the worker’s survivors). In order to be eligible to receive pension benefits in Japan, a foreign worker must have paid into the pension scheme for at least 25 years.
Since many foreign workers do not stay in Japan long enough to qualify for their pension benefits, the Japanese government has made it possible for workers to obtain refunds for their pension insurance contributions when they leave Japan.
After you have left Japan, you are eligible to claim your pension contributions as a lump sum. In order to do this, you need to make sure to pick up a claim form from the local social insurance office before leaving Japan. Return the completed form to the appropriate Japanese office after you have left the country and you will receive your refund in the mail.
Pension agreements between Japan and other nations exempt certain workers from pension contributions. To qualify for exemptions, those workers simply submit the appropriate paperwork to their social security office. This eliminates the hassle of the lump-sum withdrawal process.
A list of all the countries that have pension agreements with Japan can be found through the Japan External Trade Organization , under the table “Employees’ Pension Insurance”.
If you decide that you would rather pay into the system and make a lump-sum withdrawal (if there is a chance you will stay in Japan indefinitely, for instance), do not submit your exemption paperwork. Simply make your pension contributions and then a lump-sum withdrawal if you leave Japan.
Workers from pension agreement nations are able to access their Japanese funds if they have paid into either system for a total of 25 years. There are two types of agreements: totalisation and elimination of dual coverage.
Totalisation - If a German man, for example, pays into a pension fund in Germany for 15 years, then pays in Japan for 10 years, his years of payment are totalled to 25 and he becomes eligible for his Japanese benefits. Similarly, years paying into the Japanese system count toward his pension eligibility in the Germany. If the same man pays into the German system for 10 years, then pays into the Japanese pension insurance for 10 years, then returns to Germany and pays there for another 5 years, he is counted as having paid 25 years toward his German pension.
Countries that have a totalisation agreement with Japan: Germany, United States, Belgium, France, Canada, Australia, Netherlands, Czech Republic, Spain, Ireland. (January 2011)
Elimination of dual coverage - This aims to stop people having to pay contributions in two countries. As a general rule you will be covered by the country in which you work. If you are sent by your employer in your home country to work in Japan, or you are employed locally in Japan you will be covered by the Japanese system. If your work in Japan is not expected to last more than five years it is considered a “temporary detachment”. Under the exemption agreement you won’t be covered under the Japanese system but by your home country’s system. If your work is extended for more than the five years you are then eligible for coverage on the Japanese system (but often people remain under their home country’s coverage).
If you work in both Japan and the agreement country at the same time, you will be covered only by the pension system in the country where your primary place of residence is located. If Japan is your primary place of residence, you will be covered only by the Japanese pension system and exempt from coverage in the other country.
Countries that have an elimination of dual coverage agreement with Japan: United Kingdom, South Korea (January 2011)
Countries that have signed an agreement with Japan (Under preparation for implementation): Italy, Brazil, Switzerland