MBA Japan

Pension System in Japan


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Japanese pensions are normally payments made in the form of a guaranteed annuity to a retired or disabled employee.

The Japanese pension system is a comprising of public and private pension systems. The difference between public and private pensions depends on whether the insurer of pensions is the government or not. Public pension systems include Employees' Pension Insurance (kosei nenkin), several benefit societies for public servants and National Pension Insurance (kokumin nenkin) for other people. Private pension system plays an important and growing role in providing for old age. It is an optional system for larger pensions.

National Pension Insurance

The National Pension Insurance Law was introduced in April 1961, accepting all the people previously uncovered, under social insurance. Participation in the National Pension System became compulsory for everyone (even for the jobless people) between 20 and 59 years old.

Since then, to the present time any resident in Japan, who is between 20 and 59 years of age, including foreigner residents, is required to enroll in the National Pension Insurance (Basic Pension). But if you are already a member or a family dependent of a member of employees' pension system or a benefit society, you do not need to enroll. There are three types of basic pension: basic pension for the disabled (paid under certain conditions when a pensioner becomes disabled due to illness or injury), basic pension for the bereaved (paid to a pensioner's wife and children under certain conditions when a pensioner dies) and basic pension for the elderly (payable in general to a pensioner at the age of 65).

Employees' Pension Insurance

The Employees' Pension Insurance establishes the heart of the salary insurance for retirees. All companies with more than 5 employees and their employers under 70 years of age are required to participate in this system. Employees' Pension is principally for those who are employed by private business companies. Contributors to the employees' pension are entitled to future pension payments and also to the use of several health facilities.

If the insured person has contributed in the public pension system for at least 25 years, they will obtain the Employees' Pension from when they reach 65 years of age till their death. On the other hand, if a non-Japanese resident is a temporary visitor who has participated in the Employees' Pension Insurance System for at least six months but has not obtained any benefits in Japan, they will be paid a lump-sum benefit according to the length of contribution.

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