Note: The following is from the CLAIR General Information Handbook has been produced for JET Participants from information taken from the homepage of the Japan Pension Service and a pamphlet that they produce. CLAIR is not affiliated with the Japan Pension Service in anyway and the information provided here is intended as a reference only. Therefore CLAIR assumes no responsibility for any damage (including financial losses) that occur from the information (or lack thereof) provided here. Talk to your supervisor to be exactly sure of your situation.
Lump-sum Withdrawal Payment (Dattai ichijikin)
Payment into the Japanese Pension System is mandatory for everybody living and working in Japan. This money is deducted from your monthly remuneration. Foreign nationals who have been paying Pension Insurance, and who give up residence in Japan, are able to apply for a Lump-sum Withdrawal Payment (pension refund). In order to be eligible for the Lump-sum Withdrawal Payment, you must fulfil all of the following conditions:
- Send your Application for the Lump-sum Withdrawal Payments within two years of leaving Japan
- Not possess Japanese citizenship
- Have paid Employees’ Pension Insurance premiums for six months or more
- Not have a place of residence in Japan (those who submitted a moving-out notification before exiting Japan)
- Never qualified for pension benefits (including Disability Allowance).
Filing for the Lump-sum Withdrawal Payment and the tax refund associated with it is outlined below:
- Before leaving, get the necessary forms and designate a tax agent
- After leaving Japan, post necessary forms to the Japan Pension Service to claim a refund
- Receive Lump-sum Withdrawal Payment into overseas bank account
- Mail notice of refund to tax agent in Japan
- Tax agent files for refund of tax on Lump-sum Withdrawal
- Tax agent receives tax refund
- Tax agent transfers the money to you.
Those who fulfil the conditions to receive a Lump-sum Withdrawal Payment, shall be granted an amount according to their remuneration, rate paid and period of coverage. For the actual amount you will receive, please refer to the Japan Pension Service website. In total you will approximately get:
- 1 year (12 mos.) ~280,000 JPY
- 2 years (24 mos.) ~560,000 JPY
- 3 years (36 mos.) ~840,000 JPY
You cannot get pension refunds for your 4th and 5th year on JET.
Process for Filing for Lump Sum Withdrawal
Before leaving Japan, obtain the form “Lump-sum Withdrawal Payment Arbitration Bill” (dattai ichijikin seikyūsho) from the Japan Pension Service Office (nenkin jimusho) or the National Pension Section of the municipal office nearest you, or download the form from in PDF format.
Fill in all necessary information (you will need to know the information included in your blue Pension Book – if you don’t have it your supervisor will probably have it) and mail your completed forms and accompanying documents to the Japan Pension Service after leaving Japan.
You must attach the following items to your claim form:
- A copy of your passport (the page(s) showing your Status of Residence and the date of your final departure from Japan, as well as the page(s) showing your name, date of birth, nationality, and signature).
- If your claim form is not stamped with a certified bank stamp, a document (a copy of your bank statement, bank passbook, etc.) which verifies your bank’s name, branch office name, branch address, bank account number, and the full name of the account holder (must be your name) must be attached.
- Your Pension Book.
Please send the claim form, along with the accompanying documents to:
Japan Pension Service
Suginami-ku, Tokyo 168-8505
If granted, the Lump-sum Withdrawal Payment will be deposited directly into your bank account overseas. In principle, the amount of the Lump-sum Withdrawal Payment remitted to the account will be calculated at the currency exchange rate on the date of transaction, and will be remitted in the currency of the country where the bank is located.
To make enquiries about the status of your application, you will need to know your Basic Pension Number so please make a note of it before sending in your application. Enquiries: 03-6700-1165 (Japanese only).
Social Security Agreements Between Japan and Other Countries
Social security agreements aim to tackle problems related to pensions arising from increasing people-to people exchange. Practically speaking they aim to stop people having to pay into more than one pension system and to allow people to transfer their period of coverage to another pension system.
As of January 2014, countries with social security agreements with Japan are Germany, United Kingdom, South Korea, United States of America, Belgium, France, Canada, Australia, Netherlands, Czech Republic, Spain, Ireland, Brazil, Switzerland and Hungary. However, the agreements with the United Kingdom and South Korea do not have pension enrollment measures in place that would allow you to count your enrollment period in Japan toward your home county’s pension system. Italy and India have signed agreements, but they are not yet being implemented.
For more information about social security agreements, please refer to the Japan Pension Service website.
Some Important Things to Keep in Mind
- Should the applicant pass away before receiving the Lump-sum Withdrawal Payment, a spouse, child, parent, grandchild, grandparent or sibling living off the same income source, or who is considered to be a member of the same fiscal household at the time of the applicant’s death, can receive payment in place of the applicant (in the case that the applicant passes away after application).
- A 20% income tax is imposed on the Lump-sum Withdrawal Payment. The following section explains how to claim this tax back.
- The amount of pension refund that can be claimed depends on the term of appointment, and therefore will be different according to when the JET participant arrived in Japan.
Tax Refund on Lump-sum Withdrawal Payment
Those who are eligible to file for the Lump-sum Withdrawal Payment on the Employees’ Pension Insurance, which includes most JET participants, may also qualify to receive a refund on the 20% flat tax placed on the Lump-sum Withdrawal Payment.
1. Designate a person to file your tax paperwork.
Before leaving Japan, get a copy of the document called “Notification of Tax Agent” (nōzei kanrinin no todokesho- gaikokujin-yō) from any tax office branch. Submit the form to the tax office with jurisdiction over the address where you last lived before departure from Japan, to designate your tax agent. When designating a tax agent, find someone you trust (a colleague, friend, etc.) with financial matters and whom you can easily correspond with once you return to your home country. A tax agent must be a resident of Japan, but does not have to be Japanese. If you leave Japan without filing the “Notification of Tax Agent” you can file it when making your claim for a tax refund. Keep in mind that asking someone to be your tax agent places burden on them and nobody, including anyone at your contracting organisation, is obligated to do so.
2. File for the Lump-sum Withdrawal Payment
After leaving Japan, file for the Lump-sum Withdrawal Payment. Once you have received the payment from the Japan Pension Office, send the original copy of the “Notice on Payment of the Lump-sum Withdrawal Payment (Entitlement)” (dattai ichijikin shikyū kettei tsūchisho) to your tax agent, which is sent to you with remittance of the Lump-sum Withdrawal Payment.
3. Tax refund application by designated tax agent
Have your tax agent go to the same tax office as in Step 1 above and file an Income Tax Return (kakutei shinkokusho) on your behalf. The refund will be deposited into the bank account your tax agent designates in Japan. Once received, have your tax agent transfer the refunded amount to your own bank account.
Some Important Things to Keep in Mind
- Tax refund applications must be made within five years of leaving Japan
- All JET participants, whether they pay Japanese taxes or not, will be subject to the 20% taxation on their Lump-sum Withdrawal Payment
- CLAIR does not handle the paperwork for this refund.
All enquiries must be directed to the designated tax office where you were a resident in Japan. Please note that JET participants must personally pursue their specific case with their local tax authorities.