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Tuesday, May 24, 2011
Pension payout query: to leave it or lump it?
Marc has a question about pension refunds for foreigners: "I was a resident of Japan for about 25 years and I paid into the system for about 20 years. Six years ago my Japanese employer transferred me to Vietnam. Since then we did an employee exchange with a South African company. This company has been paying my salary in Vietnam, but not my social benefits in Japan.
"My employment will terminate with the South African company in 2012 and I am scheduled to return to Japan later next year. My question is: Does the Japanese pension system still refund money to foreigners who have paid in and leave the country?"
First of all, which pension system have you contributed to: the National Pension System (kokumin nenkin) or the Employee Pension System (kōsei nenkin)? The rules vary slightly for each in how they address cases such as yours.
For example, if you're part of the National Pension System, the only way to receive a refund is to apply for a lump-sum withdrawal, for which you'll need to meet these requirements: You must be non-Japanese and have made contributions for at least six months — but not yet be qualified to receive pension benefits — and must not have a residence in Japan. An important point to note is that you can only apply for the lump sum within two years of leaving Japan.
However, you would only be able to receive a refund of up to 36 months-worth of contributions — the actual amount depends on the number of months that contributions were made, but 36 is the cap. Also, if you take the lump sum, the years you contributed that qualified you for the payment would no longer count toward any totalization deal your home country may have with Japan.
If you have contributed to the Employee Pension System, you can also get a refund, and the 36-month cap still applies, though the refund amount depends on your salary and how much you've contributed. In this situation, it's best to visit the pension office to work out the specifics.
However, in your case, it might be better to take advantage of the agreement your home country has with Japan, if applicable (Japan has social security agreements with Australia, Belgium, Canada, the Czech Republic, France, Germany, Ireland, the Netherlands, Spain, South Korea, the U.K. and U.S.). If your home country has struck one of these bilateral agreements with Japan, your total number of years contributing here and back home would likely be added together, and as a result you may qualify to receive your Japanese pension after you leave Japan. However, each country agreement differs, so it would be best to visit your local pension office (with your pension book) when you return to Japan to discuss your options.
To find your nearest pension office, visit www.nenkin.go.jp/office/map4.html (Japanese). You can read more about some of the above pension information, in English, here: www.nenkin.go.jp/english/pdf/1.pdf