Japan’s Pension System Overview

 

Understanding the difference between 国民年金 (Kokumin Nenkin) and 厚生年金 (Kōsei Nenkin) is key to grasping how Japan’s pension system works. Here’s a clear comparison:

Japan’s public pension system has two main layers:

🔹 1. National Pension – 国民年金（Kokumin Nenkin）

The basic pension for everyone living in Japan between ages 20 and 60, including students, part-timers, freelancers, and unemployed people.

  • Who joins?
    Everyone must be enrolled.
    But it’s especially for:

    • Self-employed

    • Freelancers

    • Part-time workers (who don’t qualify for company pension)

    • Students
      → These are called Category 1 insured people (第1号被保険者)

  • Premium (as of 2025):
    Fixed monthly amount: ¥16,980 per month (subject to change yearly)

  • Pension Benefit:
    Flat-rate pension (around ¥66,250/month after retirement if you paid in full for 40 years)

🔸 2. Employees’ Pension Insurance – 厚生年金（Kōsei Nenkin）

A workplace-based pension that includes and adds on top of the National Pension. More contribution = more benefit.

  • Who joins?

    • Company employees

    • Public servants
      → These are Category 2 insured people (第2号被保険者)

  • Premium:
    Percentage of salary (shared by employee and employer)
    → About 18.3% of your salary and bonus combined (9.15% paid by you, 9.15% by your company)

  • Pension Benefit:
    Includes:

    • National Pension portion

    • Additional earnings-linked pension (based on how much you earned and how long you worked)

🔍 Quick Comparison Table

Feature 国民年金 (Kokumin Nenkin) 厚生年金 (Kōsei Nenkin)
Who? Everyone Company Employees
Type Flat-rate basic pension Earnings-based pension (includes National Pension)
Premium Fixed (¥16,980/month) % of salary (~18.3%)
Paid by Individual Employer & Employee
Benefit Basic pension only Basic + Earnings-linked pension
Enrollment Self-enrolled Company-enrolled

🧠 Bonus Terms You May See

  • 第1号被保険者 = Category 1 (self-employed, etc.)

  • 第2号被保険者 = Category 2 (company workers)

  • 第3号被保険者 = Category 3 = spouses of Category 2 workers (who don’t work enough to be insured themselves)

That 第1号／第2号／第3号被保険者 notation can feel very bureaucratic and is definitely one of those things that clutters explanations when you’re just trying to understand the basics. It’s like they expect everyone to be a pension officer 😅

🧾 Simpler Mental Model

Person Type Pension Type Who Pays Notes
🧑‍💼 Regular company employee 厚生年金 Employee + employer You’re automatically enrolled.
🧑 Self-employed / freelancer / unemployed 国民年金 only You yourself Must register and pay manually.
👩‍❤️‍👨 Spouse of company worker (non-working or low-income) 国民年金 (free) Covered by partner’s 厚生年金 No payment needed if conditions are met.

 

🏛 Japan’s Public Pension Cheat Sheet

(a.k.a. “How to survive the pension maze without becoming a pension officer”)

“It’s like they expect everyone to be a pension officer, so here’s the map instead.”

Nickname Official Category Typical Members How you join & pay 2025 Premium (reference) Key exit / switch rules
1 🌱 Freelance & Friends 第1号被保険者 Self‑employed, part‑timers who don’t qualify for company insurance, students, job‑seekers You pay the flat National Pension (国民年金) premium yourself ¥16,980 / month If you become a company employee (≥ 20 hrs/wk, etc.) you switch to Cat 2
2 💼 Company Crew 第2号被保険者 Full‑time & qualifying part‑time employees, civil servants Employer enrols you in Employees’ Pension (厚生年金); premium ≈ 18.3 % of salary/bonus split 50‑50 with employer Variable Leave the company → you drop to Cat 1 (unless new employer also offers 厚生年金)
3 🏠 Dependent Spouse 第3号被保険者 Non‑working / low‑income spouse (age 20‑59) of a Cat 2 worker Spouse’s employer files; you pay ¥0 (premiums covered by the system) ‑ Income wall: if annual earnings rise above ≈ ¥1.30 M (or ≈ ¥1.06 M if you work ≥ 20 hrs/wk at a large employer), you must leave Cat 3 and join Cat 1 or Cat 2, start paying your own premiums mhlw.go.jpmhlw.go.jp

Quick memory hook

mathematica
🌱 Category 1 = I pay myself
💼 Category 2 = Company & I pay together
🏠 Category 3 = Spouse’s job covers me (but only while I stay under the income wall)

⚠️ About that “income wall” (年収の壁)

  • ¥1.30 M / year: classic threshold. Earn more and you lose Cat 3 status even if you work very few hours.

  • ¥1.06 M / year: lower wall that kicks in if you work ≥ 20 hrs per week for a company with 101 + (2024) → 51 + (2026) employees and make ≥ ¥88,000 per month. That company must enrol you in 厚生年金, turning you into Category 2.

  • Temporary spikes can be ignored if your spouse’s HR files a one‑year exception file (特例). mhlw.go.jpmhlw.go.jp

📝 Why bother knowing this?

  1. Money math – Cat 2 premiums are higher now but give a larger earnings‑linked pension later; Cat 1 is cheaper but only the flat basic pension; Cat 3 is free (until you cross the wall).

  2. Life changes – switching jobs, going freelance, or increasing part‑time hours can silently shift your category and monthly obligations.

  3. Planning leave – during maternity/childcare leave you stay Cat 2 (premiums often waived) and your spouse can stay Cat 3 if their own income stays under the wall.

🍬 Tiny reminder card (print / paste into Notion)

🌱1 I pay flat ¥16,980 → Basic pension
💼2 Employer & I split ~18 % → Basic + earnings pension
🏠3 ¥0 if spouse is Cat 2 & I earn ≤ ¥1.06 M/¥1.30 M → Basic pension only

 

Category 3 Pension Benefit

🏠 Category 3 people do receive pension benefits later in life — the same flat-rate pension (called 老齢基礎年金 / Rōrei Kiso Nenkin) as Category 1.

Let me explain clearly:

🧓 What Kind of Pension Do Category 3 Receive?
Type Name in Japanese Who gets it How much (2025)
🧓 Basic Pension 老齢基礎年金 (rōrei kiso nenkin) Anyone who paid into 国民年金 for 10 years or more — includes Category 1 and 3 Up to ¥66,250/month (for full 40-year contribution history)

  • 👩‍❤️‍👨 Category 3 people are considered to be “paying” into the pension even though they don’t pay any money directly — the system treats them as if they are contributing during those years.

  • So if you’re enrolled as Category 3 for, say, 10 years while your spouse works full-time, you are earning pension eligibility as if you paid 国民年金 premiums during that time.

🧠 Memory Tip:

Category 1 & 3 → Eligible for the flat-rate Basic Pension
Category 2 → Eligible for Basic Pension + Employees’ Pension (厚生年金) (which is salary-based)

⚠️ Important caveats:

  • You still need at least 10 years total of pension-covered periods (any combination of Cat 1, 2, or 3) to start receiving payments after age 65.

  • If you have a gap (like forgetting to enroll or leaving Japan and not being covered), that can reduce your pension or disqualify you until the 10-year rule is met.

  • Category 3 status doesn’t happen automatically — your spouse’s employer must file it correctly. Always check with HR!

💡 Does the Working Spouse Pay for Category 3?

👉 No, the working spouse does not pay extra for you.

  • The pension premiums for Category 3 are covered by the government using the Employer + Employee contributions from Category 2 workers (like your spouse).

  • In other words, the entire system subsidizes Category 3 people — your spouse doesn’t pay double, and you don’t pay anything directly.

🧾 Breakdown:
Category Who Pays Monthly Premium (2025 example)
Category 1 (self-employed, freelancers) You ¥16,980 flat rate
Category 2 (salaried workers) Employer + Employee split ~18% of salary (for 厚生年金)
Category 3 (dependent spouse of Category 2) Nobody directly ¥0 — system-funded

✅ So while your working spouse is contributing for their own厚生年金 (Employee’s Pension), they do not pay more because you are Category 3.

🧠 Analogy:

Think of it like a group insurance plan: the cost of covering non-paying members (like dependents) is spread across all paying members in the system — not charged to any one person.

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