Procedures

Do I have to pay an employee pension? Understanding Social Security Agreement

Yaaay team April 8, 2024 (Updated: April 18, 2024)
Person pushing a control button
The public pension system requires monthly payments to receive benefits in the event of disability, death, old age, or other risks. All residents of Japan, including foreigners, between the ages of 20 and 60 (for Employees' Pension Insurance, employees under the age of 70 are also subject to the obligation to join the system), are obligated to participate in the Japanese public pension system.
The "Social Security Agreement" was established to prevent foreigners from being forced to pay double premiums for insurance in their own countries and to ensure their eligibility for pension benefits. This article explains the "Social Security Agreement".

Social Security agreement designed to avoid disadvantages for foreigners

Japan's public pension system consists of two types: the Employees' Pension Insurance (Kosei Nenkin Hoken) for employed workers and the National Pension Plan (Kokumin Nenkin) for self-employed people. Foreign residents are required to join one of these plans, as long as they reside in Japan.
However, for foreigners who are enrolled in the pension system in their home country, enrolling in the pension system in Japan means paying double premiums. In addition, since it is necessary to pay insurance premiums for at least 10 years in order to receive the old-age pension in Japan, foreigners who return to their home country after less than 10 years may end up losing the amount of insurance premiums they have paid.

Some of you may think:
"Since I am a member of a pension plan in my home country, joining a pension plan in Japan would be a big burden for me."
"I am afraid that even if I join the Japanese pension system, I will not be able to receive a pension when I return to my home country in the future."

To avoid such disadvantages for foreigners, the "Social Security Agreement" exists. Under this system, foreigners from countries that have concluded a social security agreement with Japan are only required to join the pension system of either Japan or their home country, depending on the length of time they work in Japan.

Two types of provisions are included

Although there are differences from country to country, the social security agreement is basically concluded by incorporating two types of provisions.

(1) Provisions to prevent the burden of double payment of insurance premiums
・If you have been in Japan for less than 5 years, you only need to join the pension plan of your home country.
・If you have been in Japan for more than 5 years, you only need to join the Japanese pension plan.

(2) Provisions to allow pension benefits to be received in either Japan or the home country by combining the period of pension enrollment in Japan with that of the home country, so that insurance premiums are not discarded.

・The pension enrollment period in the home country can be combined with the pension enrollment period in Japan.
・The pension enrollment period in Japan can be combined with the pension enrollment period in the home country.

In other words, even if the period of pension enrollment in Japan is less than 10 years, if the period of pension enrollment in the home country totals 10 years or more, you can receive the Japanese old-age pension.
If your home country does not have a social security agreement with Japan, you will not be covered by the social security agreement. Please see below for the status of the Social Security Agreement in effect.
https://www.nenkin.go.jp/international/agreement/guidance.html

Understand the system so you don't lose out!

Japan's pension system provides ways to prevent foreigners from paying double premiums and from having their premiums disposed of. All foreigners working in Japan should fully understand the Social Security Agreement and the Lump-sum Withdrawal Payments to avoid losing out on premium payments and future pension benefits.
*Lump-sum withdrawal payments are explained in the following article.
https://yaaay.jp/yaaay-notes/understanding-lump-sum-withdrawal-payments

Was this helpful?

What are you waiting for?