Social Security Council of Ministry of Health, Labor and Welfare (MHLW) is considering law amendment to extend the upper limit to 5 years when amount of lump-sum withdrawal refund is calculated. It aims to implement it during fiscal year of 2020.
As described in pages of this site (Employee Pension and National Pension), the current upper limit is 3 years. Even when a foreign participant has paid premium for longer period, amount of the withdrawal refund does not increase further. Once this amendment is enforced, a foreign participant receives a larger amount of the refund when s/he pays for longer than 3 years.
A major reason behind the amendment is the introduction of a new residential status, Specified Skilled Worker (SSW), in April 2019. As SSW (i) is granted for 5 year period and Japanese government has a target to accept up to approx. 345,000 SSW holders in 5 year time from 2019, it is expected that foreign pension participants with longer than 3 year stay will be significantly increased. By extending the upper limit to matching 5 years and reducing non-refundable years, the amendment aims to encourage foreign workers to comply with mandatory pension participation.
Source: MHLW Social Security Council – Page 5 of Reference #1 at Pension committee meeting on Oct 30th 2019 (Japanese)