Is Japan's pension system headed for oblivion?
Jul 26, 2017, 7:30 pm
#16
Join Date: Feb 2013
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Posts: 5,378
You can't claim benefits from both simultaneously, isn't that right? How does it work? You designate nenkin as your benefactor when in Jpn, and you simply redesignate to SS when in US?
When you say have an account in each country, you mean pay into both SS & nenkin during your working years? That's only possible if you're a US citizen in Jpn or Jpnese citizen in US, correct?
Last edited by evergrn; Jul 26, 2017 at 8:07 pm Reason: meant to say "can't claim"
Jul 26, 2017, 7:38 pm
#17
Join Date: Feb 2013
Location: Hilton, Hyatt House, Del Taco
Posts: 5,378
Where did I get which figure?
The taxes? I pay them. 27 years of returns to look at.
The payout? The nenkinjimusho. I recommend English speakers go to the Shinbashi one if they want to interact in English. You get a black and white printout from them that shows paid in and to be paid out. It's all very easy to access and the people there are very good.
Saving money in central Tokyo is easy. Most Japanese have zero clue about personal finance though. I live very centrally, do not hold an expat job, and find if all very ridiculous how many of my similarly set up peers cannot figure it out.
The taxes? I pay them. 27 years of returns to look at.
The payout? The nenkinjimusho. I recommend English speakers go to the Shinbashi one if they want to interact in English. You get a black and white printout from them that shows paid in and to be paid out. It's all very easy to access and the people there are very good.
Saving money in central Tokyo is easy. Most Japanese have zero clue about personal finance though. I live very centrally, do not hold an expat job, and find if all very ridiculous how many of my similarly set up peers cannot figure it out.
Ok, I now understand where you got that from and that it's an individualized thing. Is that number merely a forecast (ie, subject to change including possibility of going to zero) or are you guaranteed a minimum of that amount in nenkin?
I hear people in Jpn saying ideally one needs to save 3000~5000man yen for retirement (on top of nenkin), assuming 20 retirement years. The equivalent figure in the US is $1.5million (on top of SS). That is such a huge difference considering similar cost of living between Tokyo and US West coast metro areas, even accounting for the fact that healthcare costs in US are >> Jpn. Do you think this discrepancy comes from Japanese people's inability to do financial calculation, or are American media/websites way too aggressive in their advice? Thing is, $1.5million makes sense to me here in the US.
Jul 26, 2017, 8:04 pm
#18
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Jul 26, 2017, 8:12 pm
#19
Join Date: Feb 2013
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Sorry, I am completely ignorant on this. So if you've worked 15 years in US and 10 years in Jpn, you get paid by both SS & nenkin whether you retire in US or Jpn? I thought that if you retired in Jpn in that scenario, then you get all your money from Jpn (and SS compensates Jpn).
Jul 26, 2017, 8:58 pm
#20
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Sorry, I am completely ignorant on this. So if you've worked 15 years in US and 10 years in Jpn, you get paid by both SS & nenkin whether you retire in US or Jpn? I thought that if you retired in Jpn in that scenario, then you get all your money from Jpn (and SS compensates Jpn).
Personally, I would prefer to have two separate sources of income to hedge against a catastrophic event happening with either system.
Jul 26, 2017, 9:00 pm
#21
Join Date: Feb 2002
Location: NorCal
Posts: 658
Google "japan salary survey" and you can find tons of data compiled by recruiting firms telling you what people make in different career tracks based on seniority and other factors. The Hays survey (link) is the most in-depth that I have seen.
Some of the averages are misleading because there is HUGE variance. Weekly Diamond did an in-depth piece on the lawyer market in Japan last week: at the five biggest firms in Japan, newly-minted junior associates make 9-12 million a year, and 10 years in will make anywhere from 15 to 40 million. Once you have equity, the sky is the limit and you can get into the 50-100 million range. On the other hand, associates at smaller firms may make anywhere from 3.6 to 7 million, and at least half of corporate in-house lawyers are in the same range. If you go to work for the government as a prosecutor, you start around 2.5 million and don't hit 6 million until you are about 10 years into the career track. Couple that with all the small-time divorce and traffic accident lawyers out there, and you can see where the 6-7 million average comes from.
In big Japanese companies, the general rule of thumb seems to be that rank-and-file employees are very lucky to break 10 million, while middle managers are usually in the 10-20 million range, and anything more than that requires you to be at senior executive level, or an extremely good salesperson, or in a particularly flush industry like finance. I remember seeing a few years ago that new graduates hired at Japanese megabanks were only making around 4 million in salary a year -- but they received housing and other benefits so the actual package was significantly more than that.
Some of the averages are misleading because there is HUGE variance. Weekly Diamond did an in-depth piece on the lawyer market in Japan last week: at the five biggest firms in Japan, newly-minted junior associates make 9-12 million a year, and 10 years in will make anywhere from 15 to 40 million. Once you have equity, the sky is the limit and you can get into the 50-100 million range. On the other hand, associates at smaller firms may make anywhere from 3.6 to 7 million, and at least half of corporate in-house lawyers are in the same range. If you go to work for the government as a prosecutor, you start around 2.5 million and don't hit 6 million until you are about 10 years into the career track. Couple that with all the small-time divorce and traffic accident lawyers out there, and you can see where the 6-7 million average comes from.
In big Japanese companies, the general rule of thumb seems to be that rank-and-file employees are very lucky to break 10 million, while middle managers are usually in the 10-20 million range, and anything more than that requires you to be at senior executive level, or an extremely good salesperson, or in a particularly flush industry like finance. I remember seeing a few years ago that new graduates hired at Japanese megabanks were only making around 4 million in salary a year -- but they received housing and other benefits so the actual package was significantly more than that.
The doctor salaries are what caught my eye though. They were listing an AVERAGE salary equal to the lowest salary I've ever heard a full time doctor making. Even at the Gen Practitioner category (lowest paid), once you average the salaries out in the US, the average should come out to roughly 12 M yen/year.
Jul 26, 2017, 9:04 pm
#22
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Join Date: May 1998
Location: Tokyo, Japan (or Vienna whenever possible)
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I don't know. Just trying to get all the info. Contemplating a move back to Jpn at some point. But I've got all my investments and retirement money in the US. Researching financial/tax implications to all of this is challenging, and I don't even know where to begin. I could move there, and then decide I have to move back to US cuz it doesn't work out. Just trying to get some info.
You can't claim benefits from both simultaneously, isn't that right? How does it work? You designate nenkin as your benefactor when in Jpn, and you simply redesignate to SS when in US?
When you say have an account in each country, you mean pay into both SS & nenkin during your working years? That's only possible if you're a US citizen in Jpn or Jpnese citizen in US, correct?
You can't claim benefits from both simultaneously, isn't that right? How does it work? You designate nenkin as your benefactor when in Jpn, and you simply redesignate to SS when in US?
When you say have an account in each country, you mean pay into both SS & nenkin during your working years? That's only possible if you're a US citizen in Jpn or Jpnese citizen in US, correct?
By accounts in both places I mean have a bank account into which the SS or nenkin could be deposited by the paying body in that country. I would access yen when the rates favored that and US$ when the rates favored that.
Once you have met minimum pay in period reqs. you can stop paying into that country's system if you wish. Ideally pay into one or the other but it sounds as though in your case there could be a division of hour work life (taxed work life) that may make this split a consideration. If there is a specific question yoiu would like asked of the Nenkinjimusho while you are in the US and you do not have Skype I would be pleased to check.
Jul 26, 2017, 10:54 pm
#23
Original Member
Join Date: May 1998
Location: Tokyo, Japan (or Vienna whenever possible)
Posts: 6,379
Sorry, I meant the payout figure.
Ok, I now understand where you got that from and that it's an individualized thing. Is that number merely a forecast (ie, subject to change including possibility of going to zero) or are you guaranteed a minimum of that amount in nenkin?
Ok, I now understand where you got that from and that it's an individualized thing. Is that number merely a forecast (ie, subject to change including possibility of going to zero) or are you guaranteed a minimum of that amount in nenkin?
I hear people in Jpn saying ideally one needs to save 3000~5000man yen for retirement (on top of nenkin), assuming 20 retirement years. The equivalent figure in the US is $1.5million (on top of SS). That is such a huge difference considering similar cost of living between Tokyo and US West coast metro areas, even accounting for the fact that healthcare costs in US are >> Jpn. Do you think this discrepancy comes from Japanese people's inability to do financial calculation, or are American media/websites way too aggressive in their advice? Thing is, $1.5million makes sense to me here in the US.
If you are getting US$2000 a month here and you have a home that is paid off or nearly so, your kids are out of the house and your bills are utilities and food mostly, I cannot see why on earth you would need another 3-5000man to survive. I assume this is for people that want to operate a car (totally unnecessary) and/or travel extensively? It is not for health care so I am not sure where they get those numbers. The US figure is GROSSLY overinflated as well and that I say as a person actively managing the finances of two US based 78 year olds.
To calculate the amount you will need requires a very very individualized calculation and it is not something that averages, medians, or back of envelope calculations can address. As many changes to lifestyle happen in the last 20 years of life as did in the first 20.
Jul 27, 2017, 1:15 am
#24
Join Date: Jan 2006
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The question I was trying to pose was not so much about people with private investments or those who have fenced off contributions via Kosei Nenkin it was the bog standard basic state pension that I was questioning.
With the population curve going over the "baby boomer" hump theres gonna be a heck load more pensioners for a period and then suddenly they're all going to be gone.
It is quite widely written about old people with large properties who can't move to smaller places to due negative equity and/or the cost of "retirement" flats and also abandoned properties too outside of metropolitan areas.
Due to my current employment situation I am obliged to pay in to the National Basic State Pension and I question if I will see a return on my investment down the line ? You read all those doomsayers about how the payable amount is going to drop sharply and so on. Will the basic nenkin still have liquidity 15 - 20 years down the line with 2x / 3x more pensioners and a rapidly falling population.
Not to mention :
- The current governments unwillingness to discuss immigration for fear of losing votes (and consequent labour shortages in things like retiremet homes)
- Pitiful efforts to get women back in to the workforce
At least to me it seems like a ticking time bomb - yeah I read someone who said they will finance it -...where from ? Japan's national debit is already balooning ?...
With the population curve going over the "baby boomer" hump theres gonna be a heck load more pensioners for a period and then suddenly they're all going to be gone.
It is quite widely written about old people with large properties who can't move to smaller places to due negative equity and/or the cost of "retirement" flats and also abandoned properties too outside of metropolitan areas.
Due to my current employment situation I am obliged to pay in to the National Basic State Pension and I question if I will see a return on my investment down the line ? You read all those doomsayers about how the payable amount is going to drop sharply and so on. Will the basic nenkin still have liquidity 15 - 20 years down the line with 2x / 3x more pensioners and a rapidly falling population.
Not to mention :
- The current governments unwillingness to discuss immigration for fear of losing votes (and consequent labour shortages in things like retiremet homes)
- Pitiful efforts to get women back in to the workforce
At least to me it seems like a ticking time bomb - yeah I read someone who said they will finance it -...where from ? Japan's national debit is already balooning ?...
Jul 27, 2017, 7:52 pm
#25
Join Date: Feb 2013
Location: Hilton, Hyatt House, Del Taco
Posts: 5,378
Once you have met minimum pay in period reqs. you can stop paying into that country's system if you wish. Ideally pay into one or the other but it sounds as though in your case there could be a division of hour work life (taxed work life) that may make this split a consideration. If there is a specific question yoiu would like asked of the Nenkinjimusho while you are in the US and you do not have Skype I would be pleased to check.
Thanks for the offer to check things up for me, but I have plenty of family in Jpn who can ask questions for me (although they need to know what to ask). When you say division of hour work life, I'm not sure if you mean having worked and paid taxes into different countries at different times. If that's what you mean, I've actually only worked in US. Just born and raised in Jpn.
The figure is calculated using a formula that looks at how much you have paid in, for how many years, how many years bonus was paid, how many years after age 60 you will work etc. If you have worked 25+ years you will get 150,000+ depending on what you paid, and it goes above 200,000 for many.
Sorry but I find those figures about as useful as the question, “how long is a piece of string”?
If you are getting US$2000 a month here and you have a home that is paid off or nearly so, your kids are out of the house and your bills are utilities and food mostly, I cannot see why on earth you would need another 3-5000man to survive. I assume this is for people that want to operate a car (totally unnecessary) and/or travel extensively? It is not for health care so I am not sure where they get those numbers. The US figure is GROSSLY overinflated as well and that I say as a person actively managing the finances of two US based 78 year olds.
To calculate the amount you will need requires a very very individualized calculation and it is not something that averages, medians, or back of envelope calculations can address. As many changes to lifestyle happen in the last 20 years of life as did in the first 20.
If you are getting US$2000 a month here and you have a home that is paid off or nearly so, your kids are out of the house and your bills are utilities and food mostly, I cannot see why on earth you would need another 3-5000man to survive. I assume this is for people that want to operate a car (totally unnecessary) and/or travel extensively? It is not for health care so I am not sure where they get those numbers. The US figure is GROSSLY overinflated as well and that I say as a person actively managing the finances of two US based 78 year olds.
To calculate the amount you will need requires a very very individualized calculation and it is not something that averages, medians, or back of envelope calculations can address. As many changes to lifestyle happen in the last 20 years of life as did in the first 20.
Jul 27, 2017, 9:10 pm
#26
Join Date: Feb 2014
Location: Frensham, Lincolnshire
Programs: RFC
Posts: 5,083
Where you retire has nothing to do with whether you are eligible to receive benefits. Since the above scenario qualifies for both programs, you would have to do the math as to whether it's better for you to combine credits into one system or apply separately for both.
Personally, I would prefer to have two separate sources of income to hedge against a catastrophic event happening with either system.
Personally, I would prefer to have two separate sources of income to hedge against a catastrophic event happening with either system.
If you retire outside the US to a place that does not have a SSA totalization or payment treaty in place then SSA is not obligated to pay you at all. They are getting very good at identifying this and acting on it.
US and Japan do have a totalization treaty and cross payment agreement in place. You cannot claim both except in some very unusual situations. Now, the chance of the Japanese side catching it are slim as they are poor on enforcement (eg. just need to maintain a nominal Japanese address), but the US side is quite good and getting better each year.
Jul 27, 2017, 9:16 pm
#27
Join Date: Feb 2014
Location: Frensham, Lincolnshire
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Posts: 5,083
A lot of the "ticking time bomb" comments assume the macro details of the situation cannot change. It's as if wages will remain the same regardless of population - why wouldn't they go up as population goes down, or are we to believe that market forces don't exist in Japan? As wages go up why wouldn't Japanese people have larger families? I'm not saying what will or won't happen. I'm saying that a lot of the Doom & Gloom predictions are based on static assumptions. I think it's more reasonable to assume that some economic things will adjust naturally and others....won't. Which will do what is the real question.
Jul 27, 2017, 11:01 pm
#28
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Join Date: May 1998
Location: Tokyo, Japan (or Vienna whenever possible)
Posts: 6,379
Where you retire can have a very important effect.
If you retire outside the US to a place that does not have a SSA totalization or payment treaty in place then SSA is not obligated to pay you at all. They are getting very good at identifying this and acting on it.
US and Japan do have a totalization treaty and cross payment agreement in place. You cannot claim both except in some very unusual situations. Now, the chance of the Japanese side catching it are slim as they are poor on enforcement (eg. just need to maintain a nominal Japanese address), but the US side is quite good and getting better each year.
If you retire outside the US to a place that does not have a SSA totalization or payment treaty in place then SSA is not obligated to pay you at all. They are getting very good at identifying this and acting on it.
US and Japan do have a totalization treaty and cross payment agreement in place. You cannot claim both except in some very unusual situations. Now, the chance of the Japanese side catching it are slim as they are poor on enforcement (eg. just need to maintain a nominal Japanese address), but the US side is quite good and getting better each year.
To mollify the SS folks a permanent US address could easily be maintained. The Japanese do not require your permanent address be Japanese to pay you. A workable scenario is a permanent US address to receive SS and a non-US address and or bank account where you receive Japanese payments. Unless it is transacted in US$ and in the US, the US would have no clue.