Lump-sum Withdrawal: National & Employees Pensions

Japanese Version

 It is mandatory even for a world talent resident in Japan to participant public pension programs, National Pension and Employees Pension. At least 10 years of pension coverage period is however required to become eligible for old-age pension. This means that a world talent, leaving Japan after residency for shorter than10 years, would end up with contributing pension premium for nothing. To avoid such a situation, a world talent, who has already left Japan, can withdraw his/her pension participation in return for a lump-sum one-time refund payment. This is called as Lump-sum Withdrawal, which is offered both in National and Employees Pensions.

 It should be noted that the withdrawal eliminates record of premium contributions as if there had been no participation at all. In other words, the record remains even when a world talent goes back to home country and stops premium contributions, as long as the talent does not withdraw. So that when s/he comes back to Japan s/he can add up her/his pension coverage period on top to what s/he has accumulated so far in the records. This means that a world talent has two options as follows when s/he leaves Japan. Which option is better? There is no generic answer. It depends on situations of an individual.

  1. Withdraw ➡︎ Lump-sum refund ➡︎ Pension period eliminated
  2. Do not withdraw ➡︎ No refund ➡︎ Pension period remains ➡︎ Can be added up with new period when re-visiting Japan

 The same situation happens to Japanese residing in a foreign country. Japanese government therefore has an agreement tied currently with 20 some countries over the two terms below. This is called as Social Security Agreement.

  • Avoiding duplicated enrollments: allowing a short term foreign resident, typically residency for less than 5 years, not to participate in pension program of the resident country.
  • ”Totalizing” pension coverage periods: between two countries when eligibility for pension is reviewed. So that having the periods slit into two countries would not be disadvantage.

 The selection between the two options above therefore has to be made considering the side effect from the period being eliminated by the withdrawal, for a world talent coming from a country and Japanese residing in a country, which has the social security agreement tied with Japan.

 Please see an article at the following links for more details.