Changing jobs? You may have to switch pension systems

photo by iexpats

In Japan, all registered residents aged 20 to 59 are required to enroll in a public pension system. Among those registered residents, employees who work for companies or private businesses are likely to be covered by Employee’s Pension Insurance System, and business owners and employees share half each of the cost of premiums. Therefore, all insured persons must be employed by businesses that are obliged to purchase Employee’s Pension Insurance System. That is, insured persons will be disqualified from Employee’s Pension Insurance System once they quit their jobs. If you start a new job from next day you left a previous job, you have to do nothing as you will be covered by new pension policy without an interval. However, if there is a day or more of gap between the day you left a previous job and the day you start a new job, you will have to switch from Employee’s Pension Insurance System to National Pension System.

How to switch pension systems and required documents

Once you terminate your membership of Employee’s Pension Insurance System, you must visit a municipal office to enroll in National Pension System within 14 days from the day you left your job. This may be a little confusing, but you were enrolled in National Pension System as a category Ⅱ insured person while you worked for the previous employer. Switching pension systems means that you need to change the category of insured person in National Pension System, as you become disqualified to be a category Ⅱ insured person by quitting a job. It is just a simple procedure. This section will introduce a procedure for a category Ⅱ insured person who quit a job to be a category Ⅰinsured person.

How to apply

To switch your status from category Ⅱ to category Ⅰinsured person, you need to submit the application form to the Insurance and Pension Division of the municipal office your address is registered to. The application form can be obtained at the Insurance and Pension Division of each office.

What to bring

Take documents and items below when you visit a municipal office.

Inkan (personal seal) ※Not required if you are applying and signing for yourself
Pension book
Document that proves the day of termination E.g. separation notice

※Required documents may vary depending on municipality. Inquire your local office beforehand.

About pension insurance premiums when you switch pension systems

As well as procedures to switch pension systems, you should know about premium payments. For example, if you terminate the previous job at the end of March and become a category Ⅰinsured person on the first day of April, the previous employer deduct your part of Employee’s Pension Insurance premium for March from your last salary and you start paying National Pension premiums by yourself from April. However, what if you leave a job during the month? Which pension premium you are going to pay for the month you left a job is decided by whether you are employed by a business or not as at the last day of the month. If you are employed until the end of the month, your employer deduct Employee’s Pension Insurance premium for the month from your last salary. If you are unemployed on the last day of the month, even if you left a job a day before, you have to switch to National Pension System and pay premium by yourself.

In addition, if you left a job on the last day of March and switch to category Ⅰinsured person of National Pension System from the first day of April, then start a new job during April, you won’t need to pay National Pension premium by yourself as your new employer will enroll in Employee’s Pension Insurance System and deduct premium for April from your salary. The ground rule is, you pay Employee’s Pension Insurance premium if you are employed on the last day of the month you leave the job, and if not, pay National Pension premium by yourself. National Pension premiums can be paid by payment slip, bank transfer or credit card.

Change jobs, change pensions

Once you get a job and start working for a company, your employer enroll you in Employee’s Pension Insurance System and deduct your part of premium from your monthly wages, and withdraw you from the system when you quit the job. But after you leave the job, you will have to sort out the following application by yourself. Don’t worry, what you have to do is just submitting an application form at a municipal office. Just remember you have to switch pension systems if there is a day or more gap before you start a new job. Also, the same applications are required every time you terminate Employee’s Pension Insurance system. So, it may be troublesome when you are job hopping.