US-Japan Pension Treaty

Good news for American citizens who find themselves staying here for more than a few years.

For about five years I have been trying to find out about the rumored treaty between the US and Japan to iron out the imbalance of pension payments. As the system presently stands, anyone who works in Japan for 25 years is eligible for a Japanese pension. Anyone who has worked for less than that is entitled to 2.4 months of his latest salary, as a lump sum payment, regardless of how much was paid into the system. This works fairly well for JET Programme people and others here for 2-3 years. It does not work well for mid-termers, who continue to pay into the system but will not see more than 2.4 months of salary back. That is about to change, for American citizens at least.

The US has been working on treaties with several other countries, and has concluded treaties with about 20, mostly European countries, but also including Chile and South Korea. Basically, the concept is the same - totalization. This means that the Japanese government will look at your American social security account and mentally add some of the years earned in America to years worked in Japan.

For example, if you worked 20 years in Japan before leaving or retiring, if you can show 5 years of Social Security payments, the Japanese government will qualify you for a Japanese pension, but at a reduced amount than the minimum 25 years would have given you.

At the same time, you are eligible to apply for an American pension based on the number of quarters you worked in America. If you have worked 40 quarters, or 10 years, you qualify for a US pension. The years shown to qualify for your Japanese pension are not transferred off your American account but remain part of your American work record. Thus you may qualify for two pensions.

The treaty has been signed by both countries, but needs to be ratified. The Japanese government has asked for a delay in implementation until they can change their computer system. In America, it has not been presented to the Senate for ratification and must be on the table for 50 working days, which turns out to be almost 6 months. So optimistically, this will go into effect October, 2005 or sometime thereafter. It will affect anyone already in the system.

I might add that this basic concept applies to Great Britain, Germany, Canada and Australia citizens, but check the treaties already in force.

This information was given to me by two very articulate staff members of the US Social Security Office of International Programs. You can call Scott Cash or Paul Butcher at 410-965-0377 for more information, but they request not for personal matters. Or you can look yourself here.