Summary

 Japan’s social security system is focused on providing pension, health and unemployment insurance benefits but also delivers elements of child benefits. It is not comprehensive in the sense that it does not provide coverage for income support, attendance allowances etc, but it is universal.  

Details

Contributions

Employer and employee contributions are broadly shared. For each, contributions are approximately $810 per month if monthly income exceeds $8,800. National Health insurance (NHI) contributions (usually around 5% for employers and employees, depending on the individual’s age) and which are included in the above totals) are levied at prefecture level, vary slightly according to location and are not universally imposed on expatriates.

A separate contribution regime applies to bonus payments. 

Treaties

There are 24 bi-lateral Agreements with Japan’s main trading partners and most European countries, plus the US, India, Canada, Australia and China. Some treaties (with the UK, Korea, Italy and China) deal with the elimination of dual coverage only, rather than the totalization of benefits and other conventional aspects of social security agreements.

Because of the range of agreements, most foreign assignees working in Japan are generally exempt from social security contributions, and continue to pay home country contributions. 

Exemptions

Individuals employed by non-Japanese businesses who are enrolled in unemployment insurance program overseas are exempt from the Unemployment Insurance element of Japanese social security.

Assignment structuring to take an individual outside the scope of a bilateral agreement, while having them paid from outside Japan, can have the effect of reducing or eliminating home country and Japanese contributions entirely (due to Japanese contributions only usually being collected on locally delivered income), albeit with a loss of benefit coverage.

Administration

 The five core elements of Japanese social security require three different registrations, but payrolls in Japan make single monthly social security contribution payments. 

Benefits

 Pension payments accrue through contributions to either the Japanese or a bilateral agreement country system, and 10 years of total combined contributions are required to draw benefits. 40 years of contributions are required for a full Japanese state pension. State health coverage under the NHI scheme do not provide full reimbursement – individuals pay 30% of the total cost of the care. 

Other

Non-Japanese employees who leave Japan can claim a refund of employee national pension contributions. The employee must have paid contributions for at least 6 months to be eligible for the refund. Refunds will be given for up to 5 years of contributions, although this lump sum would be taxable at 20.42%.

Employee social insurance contributions are tax deductible. 

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