What is "Lump-sum withdrawal payments" that foreign residents can receive? A simple explanation of the procedures and precautions for companies

※This column was translated using AI.

The social insurance system that foreigners are enrolled in when they work in Japan includes a system called Lump-sum Withdrawal Payments. This system provides a refund of a portion of the insurance premiums paid when a foreigner leaves Japan, and there are various precautions regarding the conditions for receiving the benefit and the procedures to be followed. This article will explain in detail what the “Lump-sum Withdrawal Payment” is, how to apply for it, the conditions for receiving it, and even what companies should be aware of.

1）Lump-Sum Withdrawal Payments for Foreign Nationals
The Lump-sum Withdrawal Payment is a system under the Japanese social insurance system to refund a portion of the premiums paid when a foreigner leaves Japan after paying the premiums. This system was established to ensure that premiums paid by foreign workers and short-stay foreigners will be refunded  when they leave Japan after having paid their premiums.
Look for a job

■The upper limit for Lump-Sum Withdrawal Payments was revised in 2021, increasing from 3 years to 5 years
From April 2021, the maximum number of years used to calculate the payment amount was increased from 3 to 5 years. Previously, foreign workers who had worked in Japan for 5 years and then applied for a Lump-Sum Withdrawal Payment were only refunded for 3 years' worth of Employees' Pension Insurance premiums paid in Japan. This meant that they did not receive a refund for 2 years' worth of premiums. After the law was revised, this situation was corrected, and foreign workers are now able to receive a Lump-Sum Withdrawal Payment for 5 years' worth of premiums.
（Reference）I heard that the upper limit for lump-sum withdrawal benefits has been increased. Could you please explain specifically how it has changed? | Japan Pension Service

2）Types of Lump-Sum Withdrawal Payments
There are two types of Lump-Sum Withdrawal Payments: those for the National Pension and those for the Employees' Pension Insurance. Both systems provide a partial refund of insurance premiums, but the calculation methods for determining the payment amount differ.

■Lump-Sum Withdrawal Payments from National Pension
To receive a Lump-Sum Withdrawal Payment from the National Pension, all eligibility requirements must be met. Additionally, the payment amount is calculated based on a specific formula.
※Article 9-3-2, Supplementary provisions of the National Pension Act

Eligibility Requirements
To be eligible for a Lump-Sum Withdrawal Payment from the National Pension, all of the following conditions must be met.
・Non-Japanese Nationality: The applicant must be a foreign national.
・Not Covered by Public Pension: The applicant must not be covered by either the National Pension or the Employees' Pension Insurance.
・At Least 6 Months of Premium Contributions: The applicant must have paid National Pension premiums for at least 6 months as a Category 1 insured person.
・Not Eligible for Old-age Basic Pension: The applicant must not meet the eligibility requirements for an old-age basic pension (10 years of coverage).
・No Entitlement to Disability Basic Pension: The applicant must never have been entitled to a disability basic pension or similar benefits.
・No Residence in Japan: The applicant must not reside in Japan.
・Claim Within 2 Years of Losing Residence: The claim must be filed within 2 years from the date the applicant lost their residence in Japan.

Payment amount
The amount of the Lump-Sum Withdrawal Payment from the National Pension is calculated using the following formula.
"Payment amount" = "National pension premium amount for the year that includes the month (base month) when the insurance premium contribution was paid last time" × "1/2" × "Number used for calculation of the payment amount"

The "Number used for calculation of the payment amount" used in the calculation of the payment amount is determined as follows based on the period of premium contributions.

Look for a job

■Lump-Sum Withdrawal Payments from the Employees' Pension Insurance
To receive a Lump-Sum Withdrawal Payment from the Employees' Pension Insurance, all eligibility requirements must be met. Additionally, the payment amount is calculated based on a specific formula.
※Article 29, Supplementary provisions of the Employees' Pension Insurance Act

Eligibility Requirements
To be eligible for a Lump-Sum Withdrawal Payment from the Employees' Pension Insurance, all of the following conditions must be met.
・Non-Japanese Nationality: The applicant must be a foreign national.
・Not Covered by Public Pension: The applicant must not be covered by either the National Pension or the Employees' Pension Insurance.
・At Least 6 Months of Coverage under the Employees' Pension Insurance: The applicant must have been covered by the Employees' Pension Insurance for at least 6 months.
・Not Eligible for Old-age Employees' Pension: The applicant must not meet the eligibility requirements for an old-age employees' pension (10 years of coverage).
・No Entitlement to Disability Employees' Pension: The applicant must never have been entitled to a disability employees' pension or similar benefits.
・No Residence in Japan: The applicant must not reside in Japan.
・Claim Within 2 Years of Losing Residence: The claim must be filed within 2 years from the date the applicant lost their residence in Japan.

Payment amount
The amount of the Lump-Sum Withdrawal Payment from the Employees' Pension Insurance is calculated using the following formula.
Payment amount = "Average standard remuneration of the insured period" × "Payment rate* ((Insurance rate* × 1/2) × Number according to the number of months of the insured period)

The "Number according to the number of months of the insured period" used in the calculation of the benefit amount is as follows.

3）Procedures for Applying for a Lump-Sum Withdrawal Payment
To apply for a Lump-Sum Withdrawal Payment, the following conditions must be met: 1) it must be within two years of losing social insurance coverage and 2) the applicant must not have a residence in Japan. Therefore, foreign workers typically apply after leaving Japan.

The procedure can be conducted by the foreign worker themselves or their representative. The claim form and supporting documents should be submitted to the headquarters of the Japan Pension Service or the relevant mutual aid association. Submissions can be made by mail or electronic application. For those temporarily staying in Japan, in-person submissions at a pension office or pension consultation center are also possible. The deadline for submission is within two years from the date of losing your address in Japan.

■Documents required to claim the Lump-sum Withdrawal Payment
Below is a list of documents required when applying for a Lump-sum Withdrawal Payment. A Lump-sum Withdrawal Payment Application form and supporting documents are necessary. The application form is available in 14 languages, including Japanese. Required supporting documents include a copy of your passport, proof of no longer residing in Japan, and other relevant documents. If your employer acts as your representative, there are additional documents that need to be prepared before your departure.
・A copy of your passport (page showing your name, date of birth, nationality, signature, and residence status)
・A copy of your resident registration removal certificate or a page from your passport showing your departure date from Japan
・Documentation confirming that the bank account is in the name of the claimant
・Your basic pension number notification or pension booklet (any document showing your basic pension number)
・A power of attorney if your employer is acting as your representative

Click below to download "Claim form for the Lump-sum Withdrawal Payment"
When applying for a Lump-sum Withdrawal Payment

Please note that receiving a Lump-sum Withdrawal Payment will change your pension coverage period. Additionally, there are important considerations regarding changes of address, re-entry permits, and their impact on your pension coverage. It is crucial to confirm these details when initiating the claim process.
Look for a job

4）Mechanism for Exemption of Insurance Premiums in Your Home Country
For individuals from countries with which Japan has a social security agreement, Lump-sum Withdrawal Payment can be used to offset social insurance premiums in their home country. To receive these benefits, you must claim them within two years of returning to your home country. If you choose not to receive the Lump-sum Withdrawal Payment immediately upon leaving Japan, your insurance periods can be combined for the purpose of receiving an old-age pension. However, it is important to note that if you do receive the Lump-sum Withdrawal Payment, your insurance periods will not be combined with those of your home country.

■Countries with Which Japan Has a Social Security Agreement
Japan has concluded social security agreements with the following countries.
For detailed information, please refer to the website of the Japan Pension Service.

【Details of social security agreements concluded with each country and information on partner countries】
Germany, China, South Korea, the United States, Belgium, France, Canada, Australia, the Netherlands, the Czech Republic, Italy, Spain, Ireland, Brazil, Switzerland, Hungary, India, Luxembourg, the Philippines, Slovakia, China, Finland, Sweden
（Reference）Japan Pension Service: Social Security Agreements

■Multiple Applications Are Possible
There is no limit to the number of times you can apply for a Lump-sum Withdrawal Payment. However, the total insured period must be at least three years. Additionally, each time you return to your home country, you must submit a new application.

5）Key points for employers regarding Lump-Sum Withdrawal Payments
This section provides information on what employers can do and what they should be aware of when foreign employees leave the company and return to their home countries, regarding Lump-Sum Withdrawal Payments.

■Inform the employee (or their representative) that they are responsible for the application process
The application process for Lump-Sum Withdrawal Payments is the responsibility of the claimant (either the employee or their representative), not the company. It is important to clearly communicate to the foreign worker that the company will not be handling the application process. Misunderstandings can lead to delays in processing and potential disputes.

■Be cautious about the treatment of insured periods
If you receive a Lump-Sum Withdrawal Payment, the insured period for which the payment is made will be considered as if you had not been insured. If you are eligible for crediting of insured periods under a social security agreement and may return to Japan in the future, you should carefully consider whether to receive the Lump-Sum Withdrawal Payment.

■Important considerations when providing an estimated Lump-Sum Withdrawal Payment
When providing an estimated amount for the Lump-Sum Withdrawal Payment, it is crucial to inform the employee of the potential difference between the estimated and actual amounts. While providing a model case with an estimated amount can help foreign workers understand the process better, it is necessary to make them aware that the actual amount may vary.

By effectively communicating these points, foreign workers can better understand the Lump-Sum Withdrawal Payment procedures and proceed smoothly.
Look for a job

6）Cautions Regarding Lump-Sum Withdrawal Payments
Finally, let's go over some important points regarding Lump-Sum Withdrawal Payments.

■If you have 10 or more years of eligibility period
If you have 10 or more years of eligibility period, you cannot receive a Lump-Sum Withdrawal Payment because you have acquired the right to receive an old-age pension. However, since this system was implemented in August 2017, if you applied for a Lump-Sum Withdrawal Payment by July 31, 2017, you can receive it.

■If you apply for a Lump-Sum Withdrawal Payment multiple times
The Lump-Sum Withdrawal Payment is calculated based on the period of enrollment in the Japanese pension system, up to a maximum of 36 months. If you have been enrolled in the Japanese pension system for 37 months or more and wish to receive a Lump-Sum Withdrawal Payment corresponding to your enrollment period, you need to apply for each type of residence status.

■If you apply before returning to your home country
One of the requirements for receiving a Lump-Sum Withdrawal Payment is that you do not have a residence in Japan on the date the Japan Pension Service accepts your application. Therefore, when applying for a Lump-Sum Withdrawal Payment before returning to your home country, you must submit the application form to the Japan Pension Service on or after the date of your scheduled departure from your registered residence. If you are mailing the application, be careful that it arrives at the Japan Pension Service on or after the date of your scheduled departure.

■If you have received re-entry permission
If you have departed with re-entry permission, you can apply for a Lump-Sum Withdrawal Payment only if you have submitted a notification of departure. A notification of departure can be submitted when you move your residence to a foreign country. The period for applying for a Lump-Sum Withdrawal Payment is two years from the day following the submission of the notification of departure.

If you departed without submitting a notification of departure, you cannot apply for a Lump-Sum Withdrawal Payment until the validity period of your re-entry permission expires.
（Source）For foreign nationals leaving Japan

About YOLO JAPAN
YOLO JAPAN operates a job board specifically for foreign nationals living in Japan. Beyond job listings, we offer a wide range of services to enrich your life in Japan, including online surveys, SIM cards, and rental properties.
We also provide valuable lifestyle information and exclusive deals to help you navigate life in Japan. Be sure to check out our other content.
Read Me
Announcement
Promotion