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Tuesday, June 21, 2011
Permanent residents, mind the 'gap years' in your pension payments
In response to our previous pension articles, "Japan pension answers often case-specific" (April 19) and "Pension 'gap years' and missed payments" (May 10), we've received several reader inquiries and comments regarding kara kikan, or "gap years."
Kara kikan is a period of time during which you do not make pension payments and simultaneously do not qualify for an exemption from contributions (such as for being unemployed, on low income, or a student (in special cases), for example), yet which still counts toward the 25-year minimum pay-in requirement to receive a Japanese state pension.
While conducting research for the aforementioned articles, we were told by the pension office that kara kikan no longer exists. One reader wrote in saying their local pension office had told them otherwise in regards to permanent residents. We inquired at the pension office again, and they confirmed kara kikan does exist for permanent residents and Japanese citizens, but not for nonpermanent residents, and also stressed that an individual must meet specific conditions to qualify. So, it is important to note that though it exists as a possibility for permanent residents, this does not mean that anyone with permanent residency will automatically qualify for kara kikan.
With that in mind, we must emphasize that for very specific pension questions you should visit your local pension office with your pension book to gain the best advice regarding your particular situation. Many different factors determine your eligibility to receive a Japanese pension (especially if you don't pay in for the required 25 years), and though we have tried to gather the most helpful information from the pension office, they can't answer all of our questions with much specificity without all the details of each individual case.
So, the basic rule is that anyone who has paid into a Japan pension scheme for 25 years, permanent resident or not, can receive a Japanese pension. For those who have not yet met the 25-year requirement, nonpermanent residents in particular, a country totalization agreement may be the best option, under which pension payments in Japan and your home country would be worked out depending on your contributions to both systems. Note that Japan only has agreements with Australia, Belgium, Canada, the Czech Republic, France, Germany, Ireland, the Netherlands, Spain, South Korea, the U.K. and the U.S., and the specifics of each agreement vary.
Permanent residents may qualify for kara kikan if they work abroad and concurrently do not maintain a registered residence in Japan. As we mentioned in the previous pension articles, residents of Japan are (officially, at least — but that's another column) required to pay into the state pension scheme regardless of whether they are a permanent or nonpermanent resident. So if a permanent resident works abroad and still holds a registered address in Japan during that time, they are required to pay into a Japanese pension scheme and would not qualify for kara kikan. However, if they work outside of Japan and have no registered address, then it's possible those years could count as kara kikan, but this would need to be confirmed with the pension office individually, as there are additional factors that can determine eligibility.
Social security agreements between Japan and other countries also have some bearing on these rules. For example, if a permanent resident is sent abroad to work for more than five years in a country with an agreement with Japan, they wouldn't necessarily be required to pay into the Japan pension scheme while abroad (if they maintain a residence here), but only if very specific requirements are met (for example, they must be working for and overseen by a Japanese company).
It's also important to remember, however self-evident, that if you do qualify for kara kikan and complete the 25-year requirement, you will only receive pension payments based on the amount you paid into the system. So if you only paid in for 14 years and the other 11 years were kara kikan, you would only receive benefits based on the years you contributed to the pension program (i.e. 14 years).
One thing we learned from all our research and dealings with the pension office these past weeks is that at times the information given is conflicting, at least in regards to cloudy issues like kara kikan. Most other issues are straightforward and are also explained fully in official English pamphlets. So if you think you may qualify for kara kikan, and are told by your local pension you do not qualify, it may be worth visiting or calling another office for a second opinion (which is what we found to be the best way to find an employee who was knowledgeable in and experienced with kara kikan). However, so long as they can "see" your pension history (via your pension book), it's more likely they will be able to help versus just answering general questions, as we've found some of these issues and exceptions depend on very specific conditions.
On that note, if you've also had conflicting experiences with the pension office, do you have any tips? Please let us know.
To locate your nearest pension office, please visit this page (in Japanese): www.nenkin.go.jp/office/map4.html