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Irish Net Nippon presents Everything You Ever
Wanted To Know About The JAPANESE PENSION REFUND SYSTEMAdapted from an article
originally published in the Japan Times.
Comments in italics are by Allen
Schoonmaker. By Greg Hardesty You're through, kaput, finished. Your tour in
Japan is over. The country has nothing more to offer you--or so you thought. If
you like money, read this article. For those foreigners who haven't heard the
good news, it's true: A new Japanese law will provide cash payments to foreigners
leaving the country who have paid into the nations' pension system for a certain
period. But lots of confusion remains about the new law. To clear things up, the
Weekly sat down with two officials at the Ministry of Health and Welfare (Koseisho):
Tokio Ozawa, of the ministry's pension division, and Akito Yokomaku, of the pension
guidance division of the Social Insurance Agency, a unit of the ministry. And
now, the answers to all your questions... When was the new law passed?
Who is eligible?
How many foreigners will be eligible for such a payment?
When can I apply for the payment?
Where do I get an application form?
What if I forget to get an application before I leave Japan?
Before I leave Japan, what documents should I take with me, in addition
to the application, in order to recieve the pension payment?
How soon must I submit the application?
How long will it take to get the money?
How will the money be paid?
In what currency
will it be paid?
Will the payment be taxed?
How do I know which
pension system I belong to?
Ok, the big question: How much money will I get back?
Why is it limited to three years?
What about the other 10 percent?
How do I calculate how much of a payment I'll get?
Is there a maximum monthly salary on which refunds will be calculated?
What if I earn more than that?
But why is there
a Y590,000 limit?
Why did the Japanese government decide to act now and give departing
foreigners a pension payment?
Did anyone in the foreign
community lobby for these pension payments?
Maybe if somebody did, this three-year limit on pension payments would
be longer--say, five or 10 years.
Well, getting some of
my pension money back is nice, but I still feel cheated.
What if I forget about the pension payment and stick it out by working
25 years in Japan?
Ok, I've decided to cash in my chips now and leave, and apply for
the pension payment. What if I return to work in Japan in the future?
What if I have more questions?
When was the new law passed?
A. The Diet passed
an amendment of the pension law on Nov. 2, 1994, and it went into effect Nov.
9, 1994.
Changes included raising the pension benefit and increasing each
employee's monthly share of the pension premium one percentage point to 8.25 percent
of his salary. The company kicks in the same amount to the pension fund.
This year, for the first time, the amendment created "lump-sum withdrawal payments"
for eligible foreigners working in Japan.
BACK Who is eligible?
A. Foreigners who have worked
at least six months in Japan. Those who left before Nov. 9, 1994, are not eligible.
BACK How many foreigners will be eligible for such a payment?
A. About 82,000 a year, based on 1991 immigration data.
BACK When can I apply for the payment?
A. Starting
April 1, 1995. But you must have left Japan before you apply.
BACK Where do I get an application form?
A. At
your local Social Insurance Office (Shakai Hoken Jimusho), or municipal offices
(Kuyakusho, Shiyakusho, or Machiyakuba). Brochures explaining the new law in Japanese,
English, Chinese, Korean, Spanish, and Portuguese will be sent to these offices
by April 1, 1995. Each brochure will contain an application fo the pension payment.
BACK What if I forget to get an application before I leave
Japan?
A. Contact the Social Insurance Operation Center (Shakai Hoken
Gyomu Center, 3-4-24, Tokaido-nishi Suginamiku, Tokyo 168. Phone number is 03-3334-3131.)
Eventually, the application forms may be available at Japanese Embassy and consulate
offices around the world.
BACK Before I leave Japan, what documents should I take
with me, in addition to the application, in order to recieve the pension payment?
A. You will need your pension book (nenkin techo) which is handed to you by your
employer when you leave the company. You will also need a duplicate of the page
in your passport that shows the date you left Japan, as well as the page with
your name and birthdate on it.
Finally, you must submit with the application
a document verifying the name of your bank and account number where you want the
money deposited.
BACK How soon must I submit the application?
A.
Within two years after you leave Japan.
BACK How long will it take to get the money?
A.
A few months after the application is mailed.
BACK How will the money be paid?
A. By direct
deposit into your bank account.
BACK In what currency will it be paid?
A. Payment
will be calculated in yen, and converted into your local currency.
BACK Will the payment be taxed?
A. For most foreign
workers, yes--by 20 percent. Some explanation is necessary. All foreigners working
in Japan participate in one of two pensions systems: the Employees' Pension Insurance
System (kowei nenkin) or National Pension System (kokumin nenkin). Pension refunds
will be taxed 20 percent for those in the Employees' Pension Insurance System.
No tax will be withheld for those in the National Pension System.
It should
be noted that the vast majority of foreigners working in Japan participate in
the kosei nenkin system, so their pension payment will be taxed 20 percent.
BACK How do I know which pension system I belong to?
A. Ask your employer. But basically, the Employee's Pension Insurance System covers
all employees in the private sector, excluding national and local government employees,
teachers, and employees of private schools (shiritsu gakkou).
BACK Ok, the big question: How much money will I get back?
A. First, the equivalent of no more than three years worth of pension contributions
will be returned.
BACK Why is it limited to three years?
A. Because
90 percent of foreigners working in Japan stay here less than three years. The
new pension payment was specifically designed for them. [I must comment here. This is not a reason at all. So what if 90
percent of foreigners stay less than three years. This has no legitimacy as to
whether you deserve a refund of your pension money or not.]
BACK What about the other 10 percent?
A. Too bad--unless
they working in Japan for 25 years, thus qualifying for an old-age pension (rorei
nenkin) when they turn 65.
BACK How do I calculate how much of a payment I'll get?
A. Multiply your average monthly gross salary (without bonuses) by the rate shown
in the accompanying chart that applies to you. Then subtract 20 percent for taxes.
The result is how much your payment will be.
If, however, you pay into the
National Pension System, and not the Employees' Pension Insurance System, flat
uniform fees ranging from a minimum of Y35,100 to a maximum of Y210,600 will be
paid.
BACK Is there a maximum monthly salary on which refunds
will be calculated?
A. Yes, the cap is a monthly salary of Y590,000.
BACK What if I earn more than that?
A. It doesn't
matter--the maximum payment any foreign worker will get is \1,416,00 after taxes
(someone who earns Y590,000 or more a month and has worked in Japan for at least
three years.)
BACK But why is there a Y590,000 limit?
A. To make
the pension system as fair as possible to both lower and higher wage earners.
That figure is twice the average monthly salary of all employees in Japan, and
is the top bracket of earnings in which monthly pension premiums are assessed.
Pension benefits have to be limited so everybody can benefit from the system.
[Again this is no reason at all. There is not cap on the amount
of tax that is deducted from your salary--why should there be a cap on the amount
qualified for refund?]
BACK Why did the Japanese government decide to act now
and give departing foreigners a pension payment?
A. More and more workers
are coming to Japan, and for a long time, foreigners have been complaining that
the pension system was unfair, since they were being forced to pay into it but
not get any of the money back unless they worked in Japan for at least 25 years.
Some of these complaints reached the ears of about 20 Japanese scholars and company
managers who made up a pension reform advisory committee to the minister of Health
and Welfare. This committee proposed the amendment.
BACK Did anyone in the foreign community lobby for these
pension payments?
A. Not officially.
BACK Maybe if somebody did, this three-year limit on pension
payments would be longer--say, five or 10 years.
A. It's doubtful. The very
name of the pension-refund scheme in Japanese refers to payments for "short-term"
foreigners--the 90 percent who leave within three years.
But things may eventually
change. Ministry official Ozawa called the new pension-payment system for foreigners
a "temporary step" until a more equitable system is worked out.
BACK Such as?
A. Japan is currently negotiating with
such countries as the United States and Germany on so-called "totalization" agreements
(nenkin tsusan kyotei) which would include uniform rules about pensions.
Under
such an agreement, each coverd period credited in both countries would qualify
for pension benefits.
BACK Well, getting some of my pension money back is nice,
but I still feel cheated. I've worked in Japan for six years, and am leaving soon.
That's three years of pension payments down the drain.
A. You may not realize
it, but every time you pay your monthly pension contribution, your money is going
toward two things besides an old-age pension: a disability pension (shogai nenkin)
in case you are in an accident in Japan, and survivor's pension (izoku nenkin)
in case you die. [And how many years do you have to work in Japan to qualify for
these pensions?]
BACK What if I forget about the pension payment and stick
it out by working 25 years in Japan?
A. You would then be entitled to the
pension benefits every Japanese enjoys. The average Japanese male who paid into
the system for 20 years draws a monthly old-age pension of about Y210,000 according
to fiscal 1994 figures.
BACK Ok, I've decided to cash in my chips now and leave,
and apply for the pension payment. What if I return to work in Japan in the future?
A. You will start off at square one, as far as pension contributions are concerned.
[Therefore if you are going to be working in Japan for more than
3 years, it is in your best interest to take a furlough back to your country,
apply for a refund, return to Japan, and then continue working.]
BACK What if I have more questions?
A. In Japanese,
call the government offices mentioned earlier where the pension payment application
will be distibuted and ask to speak to someone who can tell you about pensions
(nenkin). Specifically, ask about lump-sum withdrawal payments for foreigners
(tanki zairyu gaikokujin ni taisuru dattai ichijikin.)
BACK
Go to [ top of page ]
BACK
[Box accompanying article:] GO FIGURE Ok, you ask, how
much money will I get?
First calculate your average monthly gross salary
over the period you worked (don't factor in bonuses).
Then multiply that number
by the rate shown below that applies ot you.
Then subtract 20 percent for
the taxes. The result is what you will receive. Period
worked in Japan Rate
- --------------------------------- -------- 6 months or
more, but under 12
0.5 12 months or more, but under 18 1.0 18 months or more,
but under 24 1.5
24 months or more, but under 30 2.0 30 months or more, but under
36 2.5 36
months or more 3.0 EXAMPLES: - English teacher
- Manny Swift worked
at ABC Eikaiwa Gakkou. His monthly gross salary was Y250,000. He worked in Japan
for 2 1/2 years (30 months). His pension refund will total Y500,000. (Y250,000
x 2.5 = Y625,000 minus 20% tax).
- Journalist
- Valentina Davita pulled
in a monthly salary of Y365,000 as a reporter for Reuters wire service. She worked
in Japan for 4 1/2 years (54 months). Her pension refund will total Y876,000.
(Y365,000 x 3.0 = Y1,095,000, minus 20% tax).
- Stock broker
- Martin
Martini earned Y630,000 over a period of 10 years in Japan. His pension refund
will total Y1,416,000. (Y590,00 x 3.0 = Y1,770,000, minus 20% tax).
*Note:
Pension refunds are limited to three years worth of contributions (36 months)
and are calculated on a maximum monthly salary of Y590,000.
Copyright
: The Japan Times
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