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National Pension vs Employee Pension in Japan

National Pension vs Employee Pension in Japan (What You Actually Get)

Japan’s pension system is often described as simple, but in practice it is widely misunderstood — especially by foreign residents. Many people contribute for years without a clear idea of what they will actually receive in retirement.

This article explains the difference between National Pension (Kokumin Nenkin) and Employee Pension (Kōsei Nenkin), how payouts are calculated, and what you can realistically expect based on income and years of contribution.

The Two-Tier Pension System in Japan

Japan’s public pension system has two main layers:

  • National Pension (Kokumin Nenkin) – the base pension for all residents
  • Employee Pension (Kōsei Nenkin) – an additional earnings-based pension for employees

Which pension you contribute to depends entirely on your employment status.

National Pension (Kokumin Nenkin)

National Pension applies if you are:

  • Self-employed or freelance
  • Unemployed or between jobs
  • A student or dependent spouse (Category 1 or 3)

How Contributions Work

National Pension contributions are a fixed monthly amount, regardless of income.

  • Monthly contribution (2025): approximately 16,980 JPY
  • Annual contribution: approximately 204,000 JPY

What You Actually Get

If you contribute for the full 40 years, you receive the full basic pension.

  • Full annual pension: approximately 816,000 JPY
  • Monthly pension: approximately 68,000 JPY

If you contribute for fewer years, the amount is reduced proportionally.

Example: 20 Years of Contributions

  • Years contributed: 20 / 40
  • Estimated monthly pension: ~34,000 JPY

This amount alone is not designed to support retirement. It functions as a basic safety net.

Employee Pension (Kōsei Nenkin)

Employee Pension applies if you are enrolled in Shakai Hoken through an employer.

In this case, you automatically contribute to both:

  • National Pension (base layer)
  • Employee Pension (income-based layer)

How Contributions Work

Contributions are based on your salary and bonuses.

  • Total contribution rate: approximately 18.3%
  • Your share: approximately 9.15%
  • Employer share: approximately 9.15%

Your portion is deducted automatically from your payslip.

What You Actually Get

Your Employee Pension payout depends on:

  • Your average salary
  • Years of contribution
  • Standard Monthly Remuneration

Example: Salary of 6,000,000 JPY for 20 Years

Very rough estimate:

  • National Pension portion: ~34,000 JPY / month
  • Employee Pension portion: ~45,000–55,000 JPY / month
  • Total monthly pension: ~80,000–90,000 JPY

Exact amounts vary, but the difference compared to National Pension alone is substantial.

National vs Employee Pension: Side-by-Side Reality

  • National Pension alone provides a minimal base income
  • Employee Pension meaningfully increases retirement income
  • Employer contributions effectively double your savings rate

This is why long-term employees — and company directors who enroll themselves in Shakai Hoken — generally fare much better in retirement.

What If You Leave Japan?

If you leave Japan permanently, you may be eligible for a Lump-Sum Withdrawal Payment.

  • Available for up to 5 years of contributions
  • Applies to both National and Employee Pension
  • Claim must be filed within two years of departure

For a detailed explanation, see our related guide: Japan’s pension system for foreign residents .

Can You Rely on the Japanese Pension Alone?

For most people, the answer is no.

The public pension system is designed to provide a foundation, not a full retirement income. This is why many residents supplement it with:

  • NISA or iDeCo investments
  • Private savings or overseas pensions
  • Company retirement plans

If you are unfamiliar with Japan’s social systems, you may also want to review: How health insurance works in Japan .

Official Government Sources

Key Takeaways

  • National Pension alone provides only a basic safety net
  • Employee Pension significantly improves retirement income
  • Employer contributions are a major long-term advantage
  • Most residents should plan additional savings beyond the public system

Understanding how Japan’s pension system actually pays out is essential for realistic long-term planning — especially if you expect to retire outside Japan.

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