Employee’s Pension Insurance System (EPI)
If you are a full-time employee, you are likely enrolled in The Employee’s Pension Insurance System.
In this pension system, the employer and the employee pay half the contributions. The contribution amount is not fixed and depends on the employee’s salary. So, the more you earn, the higher the contributions your company and you will need to make.
The implication of the employee’s pension insurance system on expatriates working in Japanese companies (under the mandatory EPI regulations) is that they have to pay both the national, and the employee pension insurance premiums.
Different Forms of Pension Available to Eligible Expatriates
Besides providing an income in retirement, the Japanese Pension System also provides the following two benefits:
- Disability pension, where the expat receives a certain amount of money in case of disabilities.
- Survivor’s pension, where an expat’s family will receive a certain amount of money if the expat dies.
Is The Japan Pension Scheme Compulsory for Expatriates?
The answer to this question is quite simple: yes. In Japan, it is compulsory for everyone residing in Japan between the ages of 20 and 59 to join the pension system.
How Much Do You Have to Contribute as Pension and How Much Will You Get Back?
The contributions to the National Pension Scheme are the same (¥16,610 per month) for everyone, regardless of income. The pension benefit is thus also the same for everyone: ¥781,700 per year (as of 2022). Of course, this assumes you’ve paid into this system for 40 years.
For the Employee Pension Insurance, on the other hand, the amount you and your company will contribute depends on your income. Thus, the amount you will receive after retirement will vary from person to person.
Calculating how much you will receive after retirement can be complicated when variants such as early retirement, late retirement, childcare, unemployment, or self-employment are considered. However, the standard calculation is:
(0.55%) x (Average annual salary) x (Number of years in employment)
To give you a rough idea of what you can expect, an individual who worked for 40 years and had an average salary of ¥10 million throughout that time will qualify for an approximate annual pension of ¥3 million. The total pension is calculated in the table below.