Some of the Problems with the Current Pension Law

  1. Little compensation for those who opt out early. For those who joined on or after April 1, 1986 the maximum lumpsum reimbursement that can be received is 3 x the 'average monthly standard salary.'

    Months in
    System    		  Multiplier
     6--< 12   0.5
    12--< 18  1.0
    18--< 24  1.5
    24--< 30  2.0
    30--< 36  2.5
    36+    3.0

    An actual example (Name withheld) 
       Joined  system in Sept. 1990.  
   Currently has been in the system for 7 years 9 months.

   Paid into system by individual:   3,064,194
   Paid into system by school:       3,745,126
                          Total      6,809,320yen

   Total lump sum payment:  531613 x 3 = 1,594,800
    This is 52% of what he paid in, 23% of the total that has been paid in.
  2. The longer you are in the system, the less money you receive! 
      Example
          6 Yrs             3 Yrs
        in system         in system

          Salary          Salary
  1997    310,000    1997    310,000
  1996    290,000    1996    290,000
  1995    270,000    1995    270,000
  1994    250,000            290,000  x 3 =  870,000
  1993    230,000               Approx 100% of individual's contributions. 
  1992    210,000
          260,000  x 3 =  780,000    Approx 60% of individual's contributions.

  3. A Japanese can be employed for (example) 10 years in Japan, and then go abroad to work. S/he can continue to pay into the system while abroad. Non-Japanese cannot.

  4. A Japanese can be employed for (example) 10 years in Japan, and then go abroad to work. Even without further payments, when the individual returns to Japan s/he is eligible for a partial pension based on the proportion of years paid into the system vs. the total number of years required. This period without payments is called a 'kara kikan' ("empty period"). A non-Japanese cannot do this. [Possible exception: Permanent residents are treated as Japanese, but since permanent residence is lost if one is out of the country for more than one year, further clarification of this point is necessary.].

  5. A Japanese can work for a number of years, then be out of work for an indefinite period, and then finally start working again. The total number of years required is 25 years but the worker as a 'working life' of 40-45 years. A non-Japanese who is out of work loses his/her visa and is forced to leave. Period..

  6. A non-Japanese who leaves Japan has just two years in which to apply for the lump-sum payment, after which it is forfeited. Individuals who are not sure whether they might return to Japan in the future are then put in the position of having gamble on their future. If they receive the lump-sum payment and then return to work in Japan, they would have to start from year 1 again. The lump sum payment cannot be returned..