Will specified skilled workers also join the pension system? Explanation of lump-sum withdrawal payments

Do specified skilled workers need to enroll in Japanese pension insurance?

There are two public pensions in Japan: the National Pension and the Employees' Pension Insurance.

The pension scheme has the following objectives:

• You can receive money when you become too old to work (old-age pension)
• You can receive money if you are unable to work due to illness or accident (disability pension)
• If the head of the household dies, the surviving family members can receive money (survivor's pension)

In principle, "old age" here is defined as "65 years old," and old-age pensions can be received from the age of 65.

specified skilled workers also need to join the pension system

In Japan, anyone between the ages of 20 and 60, regardless of whether they are Japanese or foreign, is required to join the National Pension System.

In addition, people who work for corporations (such as limited companies) and those who work for sole proprietors with five or more regular employees are required to enroll in Employees' Pension Insurance from the time they start working until they reach the age of 70, in principle.
For this reason, Japan's pension system is sometimes referred to as "two-tiered."

Therefore, many foreigners who come to Japan with Specified Skills will be enrolled in both the National Pension and Employees' Pension Insurance.

Appropriate enrollment in a pension system is one of the eligibility criteria that must be met by accepting companies that enter into Specified Skills worker employment contracts under the revised Immigration Control Act.

However, because specified skilled workers often leave Japan before turning 65, a "lump-sum withdrawal payment" system has been established.

What is the "lump-sum withdrawal payment" that applies to specified skilled workers?

In order to receive an old-age pension, you need to have paid pension insurance premiums for more than 10 years, but if you return to your home country before that, the pension insurance premiums you have paid may go to waste.
For this reason, a "lump-sum withdrawal payment" system has been established to refund a portion of the pension insurance premiums paid.

The conditions for foreign workers to utilize the lump-sum withdrawal payment system are as follows:

• Not having Japanese nationality
• Not insured under the public pension system (Employees' Pension Insurance or National Pension)
• The total number of months for which insurance premiums have been paid is 6 months or more.
• The period of eligibility for receiving an old-age pension (10 years) has not been met
• Never had the right to receive a basic disability pension or other pension
• Does not have an address in Japan
• More than two years have not passed since you last lost your insured status under the public pension system.

Lump-sum Withdrawal Payment cannot be claimed while a foreign worker is in Japan.
If you had an address in Japan on the day you lost your social insurance eligibility, you are required to "not have passed more than two years since you lost your address in Japan after losing your social insurance eligibility."

If your home country has a social security agreement with Japan, you should check in advance, as you may lose your right to receive a pension in your home country if you receive the lump-sum withdrawal payment.

How to apply for lump-sum withdrawal

The claimant (either the claimant himself/herself or a representative) must submit the necessary documents to the Japan Pension Service, etc. within two years of leaving Japan.
For your reference, the following documents are required to apply for the Lump-sum Withdrawal Payment.

• Lump-sum Withdrawal Payment Application Form
• Copy of passport
• Documents that prove you do not have an address in Japan
• Documents verifying the name of the receiving financial institution, branch name, branch address, account number, and the account holder's name
• Documents showing your basic pension number (basic pension number notification, pension book, etc.)

If a claim is made by an agent, a power of attorney is also required.
Applications can be made by mail or electronically, but if you are visiting Japan for reasons other than work (such as travel), you can submit your application in person at a pension office or local pension consultation center.

The lump-sum withdrawal payment will be transferred to you after the Japan Pension Service has completed its review.

For more information on the lump-sum withdrawal payment, please see here.
What is the lump-sum withdrawal payment that applies to specified skilled workers? Conditions and application procedures explained!

Things to tell specified skilled workers about the pension system

Communicating the following information in advance will allow foreign workers to work with peace of mind.
We will also introduce what kind of support and communication methods you should provide.

How to pay pension insurance premiums

To make things go more smoothly, it would be a good idea to first explain the basics of pension insurance premiums.

For example, people who work for self-employed individuals with fewer than five employees are enrolled in the "National Pension" and pay their own insurance premiums to the ward, city, town, or village, but everyone else (people who work for a corporation, etc.) is enrolled in both the "National Pension" and the "Employees' Pension Insurance," and the insurance premiums are deducted from their salary.

It is also a good idea to inform them that the Employees' Pension Insurance premium includes the National Pension Insurance premium, so they do not need to pay the National Pension Insurance premium separately.

How to calculate pension contributions

It will also be reassuring to know the exact amount of insurance premiums you will have to pay.

The current (2024 fiscal year) National Pension insurance premium is 16,980 yen per month.

The insurance premium rate for Employees' Pension Insurance is 18.3% of the standard monthly remuneration (approximately the monthly salary amount), and is calculated based on a ranking table.
Insurance premiums are paid monthly by the company and the individual, split equally (9.15% each for the company and the individual).

It would be helpful to provide some concrete examples, such as, for example, if someone has a monthly salary of 200,000 yen, the company and the individual would each pay 18,300 yen each month.

You should also inform employees that they must pay Employees' Pension Insurance premiums for bonuses, and that both the company and the individual are exempt from paying insurance premiums when employees take maternity leave or child care leave.

Lump-sum Withdrawal Payment System

As mentioned at the beginning, some specified skilled workers refuse to pay pension insurance premiums, fearing that the money they have paid will be wasted.

For this reason, it is a good idea to explain the lump-sum withdrawal payment in advance so that they understand it, and also provide them with support in preparing the application documents for the lump-sum withdrawal payment before they return to their home country.

If direct support is difficult, you can also request assistance from a specialist such as a social insurance labor consultant.

Also, please be aware of the following points:

• After losing your social insurance eligibility, you must apply for it yourself within two years of leaving Japan.
• The estimated amount of the lump-sum withdrawal payment may differ from the actual amount paid.

Where can I get advice on pension-related questions?

The Japan Pension Service operates and implements the pension system in Japan.
The Japan Pension Service operates approximately 300 pension offices across the country.

If they have any questions about pensions, it would be helpful to let them know that in addition to consulting their company, they can also consult and ask at a nearby pension office.

Summary: specified skilled workers must also join the pension system! Let's also explain the lump-sum withdrawal benefit

Companies should inform employees with Specified Skills that "the pension system is a system in which not only Japanese people but also foreigners can join," "there is a system called a lump-sum withdrawal payment that will refund pension insurance premiums after they return to their home country," and "in the unlikely event that they become injured or become ill, there is a possibility that money will be paid from the pension system."

It is important that they understand in advance about the Japanese pension system and the need to pay pension insurance premiums.
It will also give you peace of mind if you are given specific figures for the insurance premiums you will pay.

We also recommend that you explain and support the requirements for foreign workers to utilize the lump-sum withdrawal payment system, the documents required to apply for the lump-sum withdrawal payment, and how to apply for the lump-sum withdrawal payment.

If you are a company considering hiring specified skilled workers in the construction industry, please feel free to contact JAC!
We also introduce specified skilled workers.

*This article was written based on information from December 2024.