PSA: Wow, Japanese pensions are terrible

29 comments

1. That’s one of the reason you do Ideco.

2. Wait till you are a foreigner who decided against staying in Japan, has less than ten years of pension contributions, and wants to take out the contributions

3. Thats why people invest in nisas, ideco.

4. Pension is just to prevent people from starving. If you want a pleasant retirement that’s what iDeCo and NISA are for. These types of self-directed programs are also much better since:

   1. There is no obfuscation of where your money goes or comes from
   2. You are not stealing from future generations 
   3. You will almost certainly get a better ROI compared to pension programs

   It would be terrible if they expanded the pension program to pay out more. If anything they should just make iDeCo mandatory.

5. How does it compare to what you paid into it though?

   So long as what you get isn’t like an order of magnitude lower than what you paid into it, I don’t see a huge problem.

6. Well firstly, pension annuity is an an income until you die, but you’re also supposed to have additional savings/investments to supplement it, and in generally a lower cost of living (and ideally house paid off etc) in retirement.

   But secondly, did you also include the Kokumin Nenkin annuity in your calculation too? Because each month you contribute to Kosei Nenkin, you’re simultaneously contributing to Kokumin Nenkin too for that month.

   So 35 years of Kosei Nenkin is: (35 years x Kosei) + (35 years x Kokumin)

7. Yes, they kind of suck. I’ve got 20 years in the system and at the moment, my projected payout at 65 is 1.7M per year. That’s with 20 years of a high salary. And I want to retire at 60 or so. So, I guess I am looking at maybe 150,000 to 160,000 per month starting at 65.

8. Yes pension is low and you need to make sure that you buy a house or apartment which is paid off before you retire. Plus ideco and nisa and you will be fine

9. Agree. Retirement planning is pretty much compulsory by this point, relying on government programs can only carry you so far.

   Unpopular opinion maybe, but I do think a lot of countries need to take a leaf from us Vietnamese’s book and have multi generational households again. It is almost impossible to have nuclear family-only setup in this current economic situation really. Parents would have great benefits of having grandparents around for childcare, and pensions go a lot further.

10. Those pensions combined are pretty good. To value defined benefit scheme pensions i divide the annual pension by 4%-5%.

    So its about a payment of Y4.5m per annum. Divide this by 4% would give you the lump sum you’d need to save to generate that pension. Its around Y100m.

    Australia operates a defined contribution system and most wouldnt have saved this amount by retirement. However if you half it, and dont have the British Pension, then thats bones of your arse stuff.

11. That’s why you do iDeCo, Company DC, and NISA where applicable. While the pension system (national + kosei nenkin) provides a foundation, it definitely doesn’t work as a standalone retirement plan.

    One thing to consider: the system serves people across the entire country. With average salaries in Tokyo around ¥6.9 million versus ¥4.6 million nationally, it’s difficult to design a program that meets everyone’s retirement needs. The pension is meant to be one layer, not the whole solution — which is exactly why the government created tax-advantaged options like iDeCo and NISA to encourage supplementary savings.

    Also worth noting tax, and avoiding double taxation with the UK pension 😀

12. I’m putting 200k a month into NISA and 51k a month into IDECO. Plan ahead as much as you can!

13. > I can’t imagine what this would look like in 25 years with Japan’s accelerating decline in living standards and inflation. Perhaps it would be worth about 90,000 yen today?

    The Japanese pension, like many pensions around the world, is updated every year in line with inflation and wages. It is true, however, that it’s not raised exactly in line with inflation. There is something called the macroeconomic slide, which accounts for population decline and keeps the pension system sustainable. Realistically, your 170-190k pension will be worth about 160-180k in the future, not 90k. Don’t account for cost of living inflation without accounting for pension increases.

    > It’s less than the British state pension (around 2.2 million yen a year) which I am lucky enough to be able to get by making moderate monthly contributions.

    Yes, the British state pension is a ridiculously good deal. You might see constantly in the news about just how amazing it is, because there are always articles about how unsustainable and draining on the government budget it is. I don’t believe that major changes will be made to the UK state pension will be made, as not appeasing to the elderly is political suicide, but there are definitely strains on the system because of the generosity of the pension. Is that good for you personally? Yes. Is that good for society? No.

    Incidentally, if you calculate how much the British pension will be in the future, taking into account their minimum 2.5% increase per year, and much more on average historically thanks to inflation and wage growth over there, you’ll find that your combined future pension will be ridiculously large.

    > Do something before it’s too late!!

    I think the majority of people on this sub are well aware of investing and are taking the necessary steps to prepare for their future. Not everyone comes from a country which allows you to contribute to a generous second pension system.

    Incidentally, while it may be true that your current salary is 5 times higher than your estimated future pension income, how much are your living expenses? That’s the only thing that really matters. You won’t need to continue to save money at that point, and you may not even have a house payment or the need for a car.

    According to the [latest statistics](https://www.stat.go.jp/data/kakei/sokuhou/tsuki/pdf/fies_gaikyo2024.pdf), the Japanese Kosei Nenkin pension is just about enough, plus or minus small individual differences, to cover the average person’s expenses.

    Admittedly, for those on Kokumin Nenkin, it’s more necessary to invest for your future, but you certainly don’t need as much money as people on YouTube would have you believe if you’re an average person.

    Having said that, it’s not optional to pay into the Japanese pension, especially as a foreigner, so there’s no need to worry. If you have access to the British state pension, you’ll be rolling in it when you retire. If you invest even a little, you’ll be absolutely rolling in it even more to a ridiculous degree.

    Don’t worry.

14. You guys are too young to remember when Western economists were just all complaining about how the Japanese pension system is too generous 🙂

15. And that is why the government expanded the NISA system 2 years ago. They know what is coming, but at least they give you the tools to fight it (unlike other countries…).

16. I’d be careful. With more and more people moving abroad, UK might very well change the idea that you just pay the minimum voluntary amount and still get the same pension than someone who paid the maximum. I wouldn’t bet on it staying like that.

    Just saying.

17. I’m seriously looking into back payments and monthly contributions to uk.gov but the exchange rate is almost crippling right now…

    edit: btw, how do you get yen back the UK? Wise or bank transfer?

18. You need to save, it’s pretty simple

19. In this day and age it feels like everyone should receive some kind of financial education starting in high school or earlier. In my country no one provided that and my family relied only on the assumption their generous pension system will always be there. I learned about investing and saving for retirement much later in life but that didn’t stop me getting onboard with all that.

    Somewhere I have read that you could see pension as a way to offset… longevity. Something extra that probably shouldn’t be your whole retirement strategy but rather an additional income / safety net that comes in handy if you outlive your projected life expectancy for which you should have made a more elaborated retirement plan (Nisa, Ideco in the case of Japan, additional investments, property, side income whatever).

    I know the usual counter argument I hear is “I don’t make enough to save and invest…” — but really every small amount counts if planned well. The key I start as soon as you can, that’s what I’d tell my younger self.

20. Maybe it is time to ask the police to investigate the people that Forced you in Chains to be a low wage slave here ?

    Oh wait, no one forced you to be a low income migrant in Japan, maybe back home you’ll get a better pension?

    Edit:
    OP can fuck off back home, where his income is likely zero…
    You’re leaching of Japan already, and when that Gaijin Hunter uses you then divorces you, you all will be leeching off the cash pool we pay into asshole.

    Fuck off back to IndoPakistan union…

21. That’s why people who wants to stay in Japan for long term invest in NISA and IDeco. For people like me who doesn’t have plan to stay in Japan for long term will invest in either BTC or home country investment.

22. I never checked my nenkin。but.i dont know what i could do about it. I just try to save money whenever i can.

23. For the UK pension, while you can receive it overseas, it gets frozen and doesn’t increase yearly until you return to the UK.

24. This is why Japan’s NISA system is quite generous, better than America. If you put away ¥100,000 per month in tsumetate and another 2.4 million in the seicho waku, you can do pretty well for yourself. The question is whether America will interfere with that and pull out a bunch of bullshit about not recognizing it, fucking Americans even more.

25. Glad my company offered the DC pension with matched contribution, because I was always really crap and paying attention to stuff like this.

26. I found the same when I looked into it: https://szabo.jp/2025/04/11/pension-in-japan/ you need DC/iDeCo and additional savings to make it work

27. In theory when you reach that age you also have less things to account for. You should have your home paid already and your expenses should be less than when being active (kids working and outside your home). But yeah, pensions can be low if you are not contributing much while being active.

28. Why you think I’m not exactly in a huge rush to pay my pension. 😂

29. It’s why Japanese wives are such prodigious savers.

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