The additional pension of the Japanese national pension is advantageous!
Who can receive the public pension in Japan?
Japanese public pensions are available to Japanese nationals, foreigners residing in Japan, and those who have paid pension premiums for 10 years.
What is the additional pension of the national pension?
By paying an additional premium of 400 yen per month in addition to the fixed premium of the national pension premium of 16,520 yen per month (for the period from April 2023 to March 2024), you will be able to increase the amount of old-age basic pension.
Who can join the additional pension plan?
・National Pension Category 1 Insured Persons: Self-employed persons, freelancers, students, and unemployed persons are eligible for National Pension Category 1 insured persons. Company employees and civil servants fall under category 2 insured persons, and family members supported by category 2 insured persons fall under category 3 insured persons, so they are not eligible for additional pension plan.
・ Voluntarily enrolled insured persons under 65 years old: Japanese citizens aged 20 to 65 years old living overseas.
I am currently living in the US. As a voluntarily enrolled insured person, I am paying the national pension fixed amount insurance premium and additional insurance premium. When filing a tax return in Japan, the national pension fixed amount insurance premium and additional insurance premium can be deducted from the tax return as social insurance premiums, which can reduce the amount of tax to be paid. In addition, since public pensions are paid until death, insurance premiums are paid in preparation for my future.
As a company employee in Tokyo, I learned about additional pensions while studying financial planners. However, since company employees fall under Category 2 insured persons, I was not able to join the additional pension plan at that time. I was thinking that I would like to join when it becomes a condition to pay additional premiums someday.
Advantages of additional pension plan
For example, let’s say that I will pay an additional insurance premium of JPY 400-yen per month for the next 10 years. The total amount of additional insurance premiums to be paid for 10 years is 48,000 yen as shown below.
JPY 400-yen x 12-month x 10-year = JPY 48,000-yen
As a result of paying the above supplementary insurance premiums for 10 years, the annual pension to be paid is 24,000 yen as follows.
JPY 200-yen x 12-month x 10-year = JPY 24,000-yen
I think that the additional income of JPY 24,000-yen after getting older is a nice thing.
The additional pension you can receive each year after age 65 is as follows:
Total amount for one year: JPY 24,000-yen (JPY 24,000-yen x 1 year)
Total amount for 2 years: JPY 48,000-yen (JPY 24,000-yen x 2 years)
Total amount for 5 years: JPY 120,000-yen (JPY 24,000-yen x 5 years)
Total amount for 10 years: JPY 240,000-yen (JPY 24,000-yen x 10 years)
Matches the total amount of additional premiums paid at the time of receiving the 2-year additional annuity. In other words, you can get your money back in two years after you start receiving the pension, and you can enjoy the benefits from the third year onwards.
What are the disadvantages of additional pensions?
If you die before the age of 65, you will not receive a full refund of the additional premiums you have paid. You want to take good care of your health on a regular basis.
Access to Japan Pension Service
For more information on supplementary pensions, please visit this link.
Summary
Japanese public pensions are available to Japanese nationals and foreigners living in Japan who have paid for 10 years.
The additional pension is a system that increases the old-age basic pension by adding 400 yen per month to the national pension insurance premium, and self-employed people, students, and unemployed can join. Overseas residents between the ages of 20 and 65 can also enroll.
If a US resident also submits an income tax return in Japan, paying a Japanese pension premium can realize tax reduction and future security.
Additional pension premium payments provide additional income in the future and are paid according to age and years of benefits. The benefit of a supplementary annuity is the return of premiums paid and additional income in the future. However, if you die prematurely, you will not be able to return.
Details can be found at the Japan Pension Service link.
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