But as years passed, I realized that Japanese pension (年金 – Nenkin) is something we foreign employees cannot ignore. Especially if we plan to return to our home country at the age of 60.
Today, I want to share how Japanese pension amount is calculated, and what difference it makes if we take pension at 60 versus 65.
If you are working in a Japanese company as a full-time employee, most likely you are enrolled in:
National Pension System (Kokumin Nenkin) – Basic pension
Employees' Pension Insurance (Kōsei Nenkin) – For company employees
As a company employee, you are usually paying into both (basic + employees’ pension). The good thing is: your company pays half of the premium. In India, many private employees don’t get this kind of structured retirement system, so in that way Japan is quite systematic.
National Pension
If you pay full National Pension for 40 years (from age 20 to 60), you receive full basic pension from age 65. As of recent figures, full basic pension is roughly around ¥800,000 per year (this amount changes slightly every year).
But most foreign employees don’t stay 40 years in Japan. Suppose:
You worked in Japan for 20 years.
You paid pension for full 20 years.
Then your basic pension will be approximately:
Actual amount depends on exact months paid.
Employees’ Pension (Kōsei Nenkin Part)
This part depends on:1) Your average monthly salary 2) Number of months you contributed
In simple terms: Higher salary + longer contribution = higher pension. For example: If someone earned an average monthly salary of ¥300,000 and contributed for 20 years, the Employees’ Pension part may give something like ¥500,000–¥700,000 per year (very rough estimate).
So total pension (basic + employees) could be:
Basic: ~¥400,000
Employees: ~¥600,000
Total: ~¥1,000,000 per year from age 65
What If I Return to India at Age 60?
Now comes the real question many Indians ask. If you leave Japan at 60 and go back to India, you have mainly two options:
Apply for Lump-sum Withdrawal Payment (if eligible and within time limit)
Keep your pension record and receive pension from age 65
Japan and India have a Social Security Agreement, so in some cases your contribution period can be combined for eligibility. That agreement is between the Governments of India and Japan, not a private arrangement.
Receiving Pension at 60 vs 65
Normally, standard pension age in Japan is 65. But you can choose early pension (as early as 60) with reduction. Here is the important part. If you start receiving pension at 60, your pension amount is reduced permanently.
Reduction is about 0.4% per month early (this percentage can change by law, so please always check latest information).
If you take pension 5 years early (60 instead of 65):
5 years = 60 months. So, 60 × 0.4% = 24% reduction
So if your pension at 65 was ¥1,000,000 per year, then at 60, it may become: ¥760,000 per year (after 24% reduction). This reduction continues for life.
Simple Comparison
If You Wait Until 65:
Annual pension: ¥1,000,000
No reduction
Higher monthly income for lifetime
If You Take at 60:
Annual pension: ~¥760,000
24% permanently reduced
You get money earlier
If you have other income in India (rent, business, family support), maybe waiting till 65 is better. If you urgently need money at 60, early pension may help.
If you permanently return to India at 60, you must maintain a bank account that can receive international transfers. Also, you must submit “proof of life” documents regularly. In addition the exchange rate (Yen to Rupees) also affects your real income.
When Yen is weak, pension value in INR becomes less. This is something we Indians naturally calculate in our heads. We always convert to rupees.
When I first heard about pension reduction, I felt it was slightly strict. But when I compare with many private sector situations in India where there is no guaranteed pension at all, I feel Japan’s system is at least stable and predictable.
If you are also an Indian in Japan thinking about retirement, I hope this small explanation helps you understand the difference between taking pension at 60 and 65.
Considering Indian Life Expectancy – Is 60 Actually Smarter?
When we discuss pension in Japan, most advice says:
“Wait till 65. You will get more money.”
In India, average life expectancy is around 67 years (approximately, based on recent public data). Of course many people live much longer — 75, 80, even 90 — but statistically speaking, average is not very high compared to Japan.
Now let us do very simple Indian-style calculation.
Case 1: Take Pension at 65
If you start at 65 and average life expectancy is 67:
You receive pension only for about 2 years.
If annual pension is ¥1,000,000:
Case 2: Take Pension at 60 (24% Reduction)
Annual pension becomes about ¥760,000.
But now you receive from age 60 to 67:
Even though yearly amount is lower, total lifetime amount is much higher. Many of us return to India at 60. Those years between 60 and 70 are usually, time with family, attending children’s weddings, doing small business, travelling within India etc.
Money at 60 may actually be more useful than higher money at 75. Waiting till 65 is beneficial only if you expect to live much longer
Japan’s average life expectancy is above 80. So the pension system is designed assuming long life. But if we plan to settle in India, our lifestyle, healthcare access, stress level, and genetic factors are different.
So decision should not be emotional — it should be practical.
Pension may look like a boring topic, but after 60, it becomes very interesting. Please check official sources and consult pension office before final decision. I am only sharing what I learned from my search and understanding.
