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Hi Blog. Good news. Until now, if you wanted to qualify for any retirement payout under the Japanese National Pension System (Nenkin), you had to contribute 300 months, or 25 years, of your salary in Japan.
This was an enormously high hurdle for many NJ residents, who would pay in but not always elect to stay the bulk of their working life in Japan. That meant that aside from getting back a maximum of three years’ worth of contributions upon request (see also here), you’d effectively lose your retirement investment as an enormous exit tax. (Incidentally, that was one of the quiet incentives for the racist Nikkei South American Returnee Worker “repatriation bribes” from the government back in 2009 — take the airplane fare home, leave behind your accrued pension. Big win for Japan’s government coffers.)
It made it so that the longer you stayed in Japan, the more of a pension prisoner you became, since if you left the country to work elsewhere, you’d lose, because you hadn’t paid into pension schemes in other countries and wouldn’t qualify.
Totalization Agreements (where countries agree that years worked in Country B count towards working in Country A as well) have eased that burden somewhat. But now the threshold for qualifying at all in Japan has fortunately been reduced. From 25 to 10 years, as of August 2017. Hurrah.
Now still remaining is the issue that the number of Japanese pensioners is increasing due to Japan’s demographically aging society, meaning that by the time you retire you’ll be receiving a smaller piece of the overall pension pie (to the levels where pensioners will live in penury; Japan is already above the OECD average poverty rate (pg. 75). And the minimum retirement age will likely be further increased to make it harder to retire younger. But at least you don’t have to invest most of your working life in Japan just to get something back. Thus, Japan is becoming more aligned with international norms. Good.
Much more information from the OECD on this issue at http://www.oecd.org/pensions/public-pensions/OECDPensionsAtAGlance2013.pdf. Dr. Debito Arudou
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