Japan runs one of the oldest and largest public pension systems in the world, and with nearly 30 percent of its population aged 65 or older, it is also one of the most tested. The system has two public tiers, a flat basic pension that everyone pays into and an earnings-related pension for employees, topped up by company and private plans. This guide explains who pays, how much, what the pension pays out and what changed with the latest reforms, with figures for fiscal 2026 (April 2026 to March 2027).
Two Tiers: National Pension and Employees’ Pension
The first tier is the National Pension (kokumin nenkin). Everyone living in Japan between the ages of 20 and 59 must be enrolled, including foreign residents, students and the self-employed. It pays a flat Old-age Basic Pension whose amount depends only on how many years a person contributed.
The second tier is Employees’ Pension Insurance (kosei nenkin hoken). It covers company employees and, since October 2015, civil servants, whose separate mutual aid schemes were merged into it. Its benefit is added on top of the basic pension and depends on a person’s salary over their working life.
Who Pays and How Much
The Three Categories of Insured
- Category 1: self-employed people, farmers, students and the unemployed. They pay the flat National Pension contribution themselves, usually by bank transfer or at a convenience store.
- Category 2: employees and civil servants. Their contributions are deducted from their pay, and they are covered by both tiers at once.
- Category 3: dependent spouses of Category 2 members who earn little themselves. They are credited with basic pension years without paying a contribution of their own.
Contribution Rates
| Scheme | Who pays | Contribution in fiscal 2026 |
|---|---|---|
| National Pension | Category 1 members, directly | Flat 17,920 yen a month |
| Employees’ Pension Insurance | Employees and employers | 18.3% of standard monthly pay and bonuses, split equally; the rate has been fixed since September 2017 |
An employee with a standard monthly pay of 300,000 yen, for example, pays 27,450 yen a month, and the employer pays the same amount. That payment also covers the employee’s basic pension.
What the Pension Pays
The Basic Pension
After 40 years of contributions, the full Old-age Basic Pension in fiscal 2026 is 847,300 yen a year, or about 70,600 yen a month, 1.9 percent more than the year before. Employees’ pension benefits rose 2.0 percent. Each missing year reduces the basic pension by one fortieth. Since August 2017, 10 years of contributions are enough to qualify for any pension at all; before that the minimum was 25 years, which left many older people with nothing.
Choosing When to Start
The standard starting age is 65, but pensioners can choose any month between 60 and 75. Claiming early cuts the pension by 0.4 percent for each month before 65; deferring raises it by 0.7 percent for each month after 65. The choice is permanent. Using the full basic pension of about 70,600 yen a month:
| Start age | Adjustment | Monthly basic pension |
|---|---|---|
| 60 | −24% (60 months × 0.4%) | about 53,700 yen |
| 65 | none | about 70,600 yen |
| 70 | +42% (60 months × 0.7%) | about 100,300 yen |
| 75 | +84% (120 months × 0.7%) | about 129,900 yen |
Deferring pays off for people who live long: someone who waits until 70 overtakes the total received from age 65 at roughly 82.
Why Benefits Rise More Slowly Than Prices
The 2004 reform introduced the “macroeconomic slide”. As long as the number of contributors shrinks and life expectancy rises, annual benefit increases are held below the growth of wages and prices. That is why pensions rose less than inflation in fiscal 2026 for the fourth year in a row. The government checks the system’s finances in an actuarial review every five years, most recently in 2024, and adjusts the length of the slide period accordingly.
Where the Money Comes From: GPIF and the Reserve Fund
Japan’s pensions are mainly pay-as-you-go: today’s contributions pay today’s pensions, and the national treasury pays half of every basic pension out of tax revenue. A reserve fund cushions the system as the population ages.
That reserve is managed by the Government Pension Investment Fund (GPIF), the largest pension fund in the world, with about 293.6 trillion yen at 31 March 2026. Since 2020 its policy portfolio has put 25 percent each into Japanese bonds, foreign bonds, Japanese stocks and foreign stocks. In fiscal 2025 GPIF earned a return of 16.47 percent, a gain of about 41.4 trillion yen and its sixth profitable year in a row. Because the fund holds so much of the Japanese stock market, any change in its allocation moves share prices and the yen.
Corporate and Private Pensions
The End of Employee Pension Funds
For decades many large companies ran employee pension funds (kosei nenkin kikin), which managed part of the public employees’ pension on the state’s behalf and added company benefits on top. When investment yields fell after the 2008 financial crisis, many of these funds could no longer cover the public portion they had taken over, and regulators required underfunded funds to submit improvement plans. The 2012 scandal at AIJ Investment Advisors, which lost most of the money entrusted to it by dozens of such funds and hid the losses, accelerated the end. A 2014 law banned new employee pension funds, and most existing ones were dissolved or converted into other plans.
iDeCo, NISA and Company Plans
Today the third tier consists of defined benefit corporate pensions, corporate defined contribution plans and the individual defined contribution plan iDeCo, whose contributions are tax-deductible. Outside the pension system, the NISA account lets residents invest with tax-free gains; its annual limits were raised sharply and made permanent in 2024, and it has become the most popular way for younger workers to save for retirement.
The 2025 Reform
A pension reform law passed in June 2025 brings more part-time workers into the employees’ pension. It removes the requirement to earn at least 88,000 yen a month and phases out the rule that only larger companies must enroll part-timers. Part-time workers gain a higher future pension, and their employers share the cost.
The same law lets older people work more without losing pension. From April 2026, working pensioners over 65 keep their full employees’ pension until salary plus pension exceeds 620,000 yen a month, up from 510,000 yen.
Pensions for Foreign Residents and Americans
Lump-Sum Withdrawal
Foreign residents must join the pension system like everyone else. Those who leave Japan after at least six months of contributions, without reaching the 10 years needed for a pension, can apply for a lump-sum withdrawal payment within two years of leaving. It is calculated on up to five years of contributions. Taking the payment erases those years, so people who may later return to Japan or count the years toward a US pension should think before applying.
The Japan–US Social Security Agreement
A social security agreement between Japan and the United States has been in force since October 2005. Americans sent to Japan by a US employer for up to five years keep paying into US Social Security only and are exempt from Japanese pension contributions, and vice versa. People who worked in both countries can combine their coverage periods to meet the minimum for a pension in either country, with each country paying for its own share.
Frequently Asked Questions
How much is Japan’s basic pension?
The full Old-age Basic Pension is 847,300 yen a year in fiscal 2026, about 70,600 yen a month, for 40 years of contributions. Employees receive an earnings-related pension on top.
Can I get my contributions back if I leave Japan?
Foreign nationals with at least six months of contributions and less than 10 years can claim a lump-sum withdrawal payment within two years of leaving, calculated on up to five years.
What is GPIF?
The Government Pension Investment Fund, which invests the reserves of Japan’s public pension system. With about 293.6 trillion yen, it is the largest pension fund in the world.
At what age can the pension start?
The standard age is 65. It can be claimed from 60 with a reduction of 0.4 percent per month or deferred to as late as 75 with an increase of 0.7 percent per month.
