Photo/Illutration A building that houses the health ministry in Tokyo’s Chiyoda Ward (Asahi Shimbun file photo)

The welfare ministry is reviewing the eligibility requirements and calculation methods for pension lump-sum withdrawal payments provided to foreign workers who leave the country before qualifying for pension benefits.

The purpose of the revisions is to encourage foreign nationals to contribute longer by making it easier for them to qualify for future pension benefits.

The ministry intends to present its proposal to a government advisory council soon.

All residents in Japan, regardless of their nationality, are required to pay into the national pension or employee pension plans.

However, foreign nationals who leave Japan before contributing for at least 10 years cannot receive pension benefits, meaning they may simply lose the money they have contributed to the pension system.

To address this issue, the lump-sum withdrawal payment option was introduced, which allows a partial refund of the pension contributions made.

Foreign nationals can claim this partial refund within two years of leaving Japan.

Under the current system, foreign nationals can still receive the lump-sum withdrawal payment even if they leave Japan with a re-entry permit.

However, once they have received the payment, their pension contribution period resets to zero.

This means that if foreign nationals return to Japan and resume making pension contributions, they may still fall short of the 10-year requirement.

In fiscal 2022, one in four of those granted lump-sum withdrawal payments held re-entry permits.

The ministry plans to revise the system so that foreign nationals who leave Japan with a re-entry permit will not be eligible for the lump-sum withdrawal payment while their period of stay remains valid.

Under the new rules, some may become ineligible for either pension benefits or the lump-sum withdrawal payment, so the ministry is considering necessary transitional measures.

The ministry also plans to increase the lump-sum withdrawal payment amount by raising the cap on the pension contribution period used to calculate it from the current five years to eight years. This would result in higher payouts for individuals who had lived in Japan for more than five years.

In making these changes, the ministry considered the longer stays of foreign nationals in Japan and the increase in long-term foreign nationals due to the introduction of the training and employment program.

The ministry said that a total of 96,727 lump-sum withdrawal payments were approved in fiscal 2021 under the national pension and employee pension plans.

While this is a decrease from 104,030 cases in fiscal 2019, the number of cases overall is on the rise.

According to the National Institute of Population and Social Security Research, foreign nationals are expected to make up 10 percent of the population in 2070, making them an increasingly important demographic in supporting the country’s pension system.

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