Withdrawal amount of Employees Pension is calculated as follows.
Amount of Lump-Sum Withdrawal: Employees Pension = Average Standard Remuneration x Multiplier
The following should be noted.
- An insured person with coverage period of 6 months or longer is eligible to apply.
- No withdrawal for those with less than 6 months as coverage period.
- The amount reaches its upper limit for those with 36 months or 3 years as coverage period, beyond which the amount does not increase any further. (Note that as of Dec 2019 law amendment is under consideration to extend this 3 year upper limit to 5 years. See more details in this blog post.)
- An insured person already eligible for Old-Age Welfare Pension can not apply for lump-sum withdrawal. Instead, the person should apply for the old-age welfare pension when they reach pension age.
- Approximately 20% of withdrawal payment is withheld as income tax, and the reminder, approximately 80%, is paid, unlike National Pension having no withholding tax deducted.
- The withholding tax can be refunded later in full or partially as a separate process.
Definitions of terminologies in the table are as follows.
- Average Standard Remuneration (ASR): Average remuneration as quotient of total sum of standard monthly salaries and standard bonuses divided by total premium coverage period in months.
- Adjustment is made for monthly remuneration for March 2003 and earlier, because premium rate for monthly salary was higher in March 2003 and earlier than in April 2003 and later. In April 2003 premium contribution from bonus has been started, so that the rate on monthly salary has been lowered since to compensate.
- Multiplier: is a number in the table below, corresponding to an insured person’s coverage period and fiscal year of their last contribution. It is calculated by the formula below.
- Multiplier = Premium rate x 1/2 x Index depending on coverage period
Case study: Withdrawal amount is JPY 660,000, for an insured person whose average standard remuneration (ASR) is JPY 300,000, Employees Pension coverage period is 24 months and the last month of the period is January 2019.
Amount of withdrawal ＝ ASR x Multiplier = JPY 300,000 ｘ 2.2 ＝ JPY 660,000