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‘Two-storey’ pension structure: Basic knowledge about the Japanese social insurance system (1)

All people aged between 20 to 60 years old living in Japan ‘must be covered by the National Pension system and must pay contributions by law’ (Japan Pension Service). The National Pension (Kokumin Nenkin, or 国民年金) is a public pension system, and you’ll be provided with a Basic Pension Number (Kiso nenkin bango, or 基礎年金番号) when registering, which is a unique number for your entire life. Monthly premium for the pension is revised regularly, and this year (2022 until March 2023) is ¥16,590.

While National Pension is a fundamental part of the Japanese pension system, the Employees’ Pension is covered by an employer. All corporations and private workplaces with more than five employees are legally obliged to enrol the Employees’ Pension which includes Kosei Nenkin (厚生年金)*. Assuming that many of readers here are non-Japanese nationals working in Japan, Kosei Nenkin is the system you belong to.

Employees’ Pension is often compared to a two-

storey building because of its structure. National Pension is to be provided when you become 65 years old as Old-age Basic Pension (Rorei Kiso Nenkin, or 老齢基礎年金), which is the first floor (see the image. (Source: Japan Pension Service. The image is arranged by the author based on the original source material for easier understanding)

Meanwhile, Employees’ Pension becomes Old-age Employees’ Pension (Rorei Kosei Nenkin, or 老齢厚生年金) and is provided on top of the National one, and thus the Employees' Pension becomes the second floor.

Because of this two-storey structure, Employees’ Pension is regarded more than basic than the National one.

*Some exceptions from mandatory coverage include private workplaces i.e. the ones NOT registered as corporations (Hojin, or 法人) of the following industries: agriculture and forestry, fishing, livestock, or judicial affairs.

**Old-age Employees’ Pension Special Benefits in the image (the left column) is provided upon your request between at the age of 60 and 64 when a beneficiary of Employees’ Pension meets the requirements.

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