The latest proposal for 2025 pension systems reforms
In July 2024 the council for social securities in Ministry of Health Labor and Welfare (厚生労働省) published their research for the expectation of future Japanese pension funds. It will be the foundation of the Ministry’s proposal to Japanese Diet, that is scheduled to discuss and pass a set of reform laws of Japanese pension systems in 2025.
In this article we’d like to pick up three points of this research, that we think important for non-Japanese persons who reside in Japan. This is article is the follow-up of our previous article. See “How will pension systems change with 2025’s reforms?“.
1. Including short-time employees in Kosei Nenkin
As we picked up in the article of our blog before, Japanese government plans to include more short-time employees in Kosei Nenkin (employees’ pension) in order to increase its contributors. In the present pension systems lots of dependent spouses in reality have a short-time employment avoiding a contributor of Kosei Nenkin. The government plans to apply Kosei Nenkin to even short-time and low-income employees, but this plan should be a burden for both employees and employers so it will be further discussed in the coming Japanese Diet.
2. Extension of Kokumin Nenkin’s contribution period – not proposed
Also as picked up before, Japanese government plans to extend the period to contribute Kokumin Nenkin (national/general pension) up to 65 years old, whose aim is also to increase its contributors.
However, this plan is not proposed to implement in 2025 reforms.
3. Raising the maximum amount of “Standard Remuneration”
Kosei Nenkin (Employees’ pension) is applied to Japanese employees, whose contributions are withheld by employers from salaries and remunerations (i.e. bonuses) before they are paid. This system is called “Gensen Choshu (源泉徴収)”, withholding system.
The amount withheld as Koasei Nenkin from salary is set according to the table of “Standard Remuneration (標準報酬月額)“.
“Standard Remuneration” increases as the employee gets salary more, but at present its maximum for monthly salary is set at 650,000yen. So the more an employee gets salary over 650,000yen/1 month, the less the proportion to be withheld as Kosei Nenkin gets.
The July’s proposal shows a simulation if the maximum of “Standard Remuneration” is raised over 650,000yen.
Whether it is really raised or not will be discussed in the coming Japanese Diet.
If “Standard Remuneration” is decided to be raised, employees who earns relatively much salary will need to contribute Kosei Nenkin more. But non-Japanese employees are permitted to claim Lump-sum Withdrawal Payments (lump-sum pension refund) for their contributions when they leave Japan, so a more contribution will end up a more refund finally.
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