Every month, money disappears from your payslip. You work hard for it, you need it, but it is gone before you even see it. That is Japan’s pension system — and most foreign workers have no idea what it actually is, where the money goes, or whether they will ever see it again. I didn’t either. Here is everything I wish someone had explained to me from the beginning.
I have been in Japan for eight years. Six of those years were before I even entered caregiving. When I first arrived in 2018, I had no idea what a pension was. I had a language barrier, limited knowledge about how Japan’s financial systems worked, and nobody sat me down to explain it.
Back then, the pension paperwork was simply delivered to my room. A paper notice. I looked at it, did not fully understand it, so I asked a senior colleague to explain it to me. Once I understood what it was, I paid all the bills. Even before I entered caregiving, I was already taking it seriously — and already disliking it.
I still do not love the system. And I am not alone in that feeling.
What is the pension system in Japan?
Japan’s pension system is called Nenkin (年金). It is a government-run retirement fund that every resident between the ages of 20 and 59 is legally required to join — regardless of nationality or visa type. You cannot opt out.
There are two main types depending on your situation.
The first is Kokumin Nenkin, or National Pension. This is for self-employed people, students, and those not covered by an employer plan. You pay a flat rate — around ¥17,510 per month — entirely by yourself. When you are not yet working or between jobs in Japan, this is often the one that applies.
The second is Kosei Nenkin, or Employees’ Pension Insurance. This is what most caregivers working at hospitals and care facilities are enrolled in. The total contribution rate is 18.3% of your monthly salary — but your employer pays half of that. So roughly 9% comes out of your payslip, and your hospital pays the other 9% on your behalf. This is actually more generous than it sounds, though it rarely feels that way when you are watching the deduction on your payslip.
How much are you actually contributing?
Let me give you a simple example. If your monthly salary is ¥200,000, your pension deduction is around ¥18,300. Your employer quietly adds another ¥18,300 on top of that — money you never see but that is being contributed in your name.
Over one year, you personally contribute around ¥219,600. Your employer adds the same. Together, more than ¥430,000 goes into the system on your behalf every year.
Over five years of working as a caregiver, that adds up to a very significant amount. I have been paying into this system for years, and I believe I have accumulated a substantial sum — though I have never sat down to calculate exactly how much.
The honest truth: why most foreign workers resent it
My colleagues talk about pensions regularly. Not because they are excited about retirement planning — but because it is a source of frustration. We call it a headache.
Here is why. To actually receive pension benefits in Japan, you need to have contributed for at least 10 years and stay in Japan until the age of 65. For most foreign caregivers, neither of those things is the plan. We are here to work, save money, support our families back home, and eventually return. We are not planning to be in Japan at 65.
And even for Japanese people who have paid their whole working lives, the pension payout at 65 is not guaranteed to be generous. Many Japanese workers themselves feel that by the time they retire, what they receive back will be far less than what they put in. If Japanese citizens feel that way about their own system, you can imagine how foreign workers feel about paying into something they may never fully benefit from.
I personally dislike the pension system. That is my honest opinion. You pay every single month, the money is gone, and the return is uncertain and distant. There are zero visible benefits while you are working. It does not feel fair — and for many of us, it is not.
But here is what you need to know: the lump sum withdrawal
This is the most important part of this post for foreign caregivers — and the part that most people do not know about until it is almost too late.
When you leave Japan permanently, you are eligible to claim a lump sum withdrawal of your pension contributions. It is called Dattai Ichijikin (脱退一時金).
To qualify, you need to meet these conditions:
- You are not a Japanese national
- You have made at least 6 months of pension contributions
- You no longer have a registered address in Japan
- You have never received Japanese pension benefits
- You apply within 2 years of leaving Japan
The amount you receive depends on how long you contributed, up to a maximum of 60 months. It is not 100% of what you paid in — the refund is capped and calculated using a specific formula. After tax is withheld at 20%, you can reclaim that tax by appointing a tax representative in Japan before you leave.
The processing time is approximately 3 to 6 months after you submit your application.
One very important warning: once you claim the lump sum withdrawal, your entire contribution history is permanently erased. If you ever return to Japan to work again, you start from zero.
What you should do before leaving Japan
If you are planning to eventually return to your home country, here is what to prepare:
Before you leave, file your moving-out notification (転出届) at your local city office. This is required as part of the lump sum application process.
Appoint a tax representative (納税管理人) in Japan — someone who can handle tax paperwork on your behalf after you leave. This is necessary to reclaim the 20% tax withheld from your lump sum.
Send your lump sum application by post to the Japan Pension Service (日本年金機構) after leaving Japan. You can find the form on their official website.
Do this within 2 years of leaving. Do not wait, do not forget, and do not assume the money will come automatically. You have to apply for it.
What about Nepal — does Japan have a pension agreement with Nepal?
As of 2025, Japan has social security agreements with 24 countries that prevent double pension contributions and allow contribution periods to be combined. Unfortunately, Nepal is not currently on that list. This means Nepali workers in Japan pay fully into the Japanese system with no connection to any pension arrangement back home.
This is another reason why the lump sum withdrawal matters so much for Nepali caregivers specifically. It may be the only way to recover any of what you paid in.
My honest advice
Know that you are paying into this system whether you like it or not. Know your rights. Know about the lump sum withdrawal before you leave — not after.
I do not think the pension system is fair for foreign workers. But ignoring it is worse than understanding it. The money is yours. Make sure you get it back.
⚠️ Note: Pension rules and amounts can change. Always confirm the latest figures and procedures with the Japan Pension Service (nenkin.go.jp) or a qualified advisor before making any decisions.
Wondering what other benefits your hospital provides? Read Caregiver Benefits in Japan: What You Actually Get on an SSW Visa.
Thinking about your long-term future in Japan? Read Can I Get Permanent Residency in Japan as a Caregiver?.
Not sure if staying in Japan long term makes sense? Read Is Caregiving in Japan Worth It? My Honest Answer After 8 Years.
For more on how Japan’s care sector works from the outside: Foreign Elderly Care Workers in Japan — Unseen Japan
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