When income decreases or is cut off due to unemployment or closure, the problem is the payment of national pension insurance premiums. Even if the payment of the national pension premium is difficult, if you do not pay it, you may not be able to receive various pensions such as the old-age basic pension.

To avoid such a situation, the national pension insurance premium exemption system and payment deferment system can be used. This time, we will introduce the contents of these two systems and the advantages and disadvantages of using the systems.

  • Conditions for exemption / deferral of payment of national pension insurance premiums

What is the national pension insurance premium exemption / payment deferment system?

What kind of system is the national pension premium exemption and payment deferment system? Let’s take a look at the outline and application method of each.

National pension premium exemption system

The “insurance premium exemption system” is a system in which all or part of the insurance premium payment is exempted. If your income is low and your income, head of household, or spouse’s income in the previous year is less than a certain amount, or if it becomes difficult to pay the national pension insurance premium due to a decrease in income, apply to the municipality. Once approved, you will be exempt from paying insurance premiums.

There are four types of exemption: “Full exemption”, “Three-quarters exemption”, “Half-price exemption”, and “One-quarter exemption”. ..

National pension premium payment deferment system

The “insurance premium payment deferment system” is a system in which the payment of insurance premiums is deferred. It is applied when the income of the previous year is less than a certain amount. Before June 2016, applications were limited to people between the ages of 20 and 30, but from July 2016, the target age has expanded, and people between the ages of 20 and 50 can now apply. It was. (* 1)

Special exemption in case of unemployment

If you lose your job and lose your income, it may be difficult to pay the national pension premium. Therefore, if you lose your job, you will be entitled to a “special exemption” for the national pension insurance premium. To apply, submit the following documents to the National Pension Office of your city, ward, town or village.

  • pension book
  • National pension insurance premium exemption / payment deferment application
  • (If you were a company employee) A copy of your employment insurance eligibility certificate or a copy of your employment insurance insured turnover slip
  • (When the business is closed) A copy of the business closure notification form or business abolition notification form
    Such

“Temporary special exemption” due to the influence of the new coronavirus

From May 2020, a special exception for exemption from national pension insurance and deferment of payment has started for those who have lost their income due to the spread of the new coronavirus infection and are unable to pay the national pension insurance premium. Those who meet all of the following requirements are eligible for the extraordinary exception.

  • Revenue has decreased due to the effects of the new coronavirus infection since February 2020
  • Judging from the income situation after February 2020, it is expected that the income during this year will reach the level corresponding to the current exemption from national pension insurance premiums, etc.

In addition, the period of the national pension insurance premium that falls under the extraordinary exception is as follows. (* 2)

  • For 2019 ⇒ February 2020-June 2020
  • For 2020 ⇒ July 2020-June 2021

(* The national pension year is from July to June of the following year)

How to apply for the national pension insurance premium exemption / payment deferment system

The following documents are required to apply for the national pension premium exemption and payment deferment system.

  • Pension notebook or my number confirmation document
  • Identity verification documents such as driver’s license and passport
  • National pension insurance premium exemption / payment deferment application
    (Downloadable from the Japan Pension Service website)
  • (In the case of application due to unemployment) A copy of the employment insurance eligibility certificate or a copy of the employment insurance insured person’s turnover slip, etc.

Prepare other necessary documents and apply at the national pension counter of your city, ward, town or village. (* 3)

It should be noted here that the national pension year is from July to June of the following year. In other words, you need to complete the procedure after July of the year you want to apply.

In addition, it is possible to apply for the unpaid amount 2 years and 1 month before the application, so if you continue to have unpaid insurance premiums, we recommend that you apply for the possible period at once.

There is one more thing to keep in mind.

If you receive a national pension premium exemption (full or partial) or a grace period, you will not be able to join the National Pension Fund or iDeCo (Individual Defined Contribution Pension).

If you are a self-employed person who is the first insured person of the national pension, you must have paid the national pension premium in order to join the national pension fund or iDeCo. In addition, if you are exempted from the national pension insurance premium or deferred payment while enrolled in the National Pension Fund or iDeCo, the payment of the premium may be suspended. (* 4) (* 5)

What are the benefits of exemption / deferral of payment of national pension insurance premiums?

What are the benefits of exempting or deferring payment of national pension premiums?

Benefits of receiving a national pension premium exemption

Generally, if there is a period of non-payment of the national pension premium, you may not be able to receive the old-age basic pension in the future, or you may not be able to receive the disability basic pension if you are sick or injured.

In that respect, if you do not leave the national pension premium unpaid and follow the exemption procedure, the period of exemption will be added to the eligibility period for the old-age basic pension.

The old-age basic pension requires an eligibility period of 10 years or more, which prevents you from losing your pension in the future. Also, if you make it exempt, you can receive the old-age basic pension according to the exemption rate. The amount of pension you can receive depends on the exemption rate as follows.

  • Full exemption: Half (of the pension you will receive if you pay the full amount)
  • Three-quarters exemption: five-eighths
  • Half price exemption: 6/8
  • 1/4 exemption: 7/8

Benefits of receiving a deferment of payment of national pension insurance premiums

The advantage of deferred payment is that you do not have to pay insurance premiums during the period. In addition, the deferred payment period will be added to the eligibility period for the old-age basic pension. It takes 10 years or more to receive the old-age basic pension, so it can be said that the advantage is that the period is not affected.

What are the disadvantages of exemption / deferral of payment of national pension insurance premiums?

There are also disadvantages to exemption and deferral of payment of national pension premiums. In particular, keep in mind that it will affect the amount of old-age basic pension you will receive in the future.

Disadvantages of receiving an exemption from national pension insurance premiums

With regard to the exemption of national pension insurance premiums, you can receive one of “full exemption”, “three-quarter exemption”, “half-price exemption”, and “quarter exemption” depending on your income situation. The exemption period is included in the eligibility period for the old-age basic pension, so you will be able to receive the old-age basic pension.

But the problem is the amount of pension you can receive. Even if you receive the exemption, it is an advantage that it is reflected in the pension amount, but it is also a disadvantage that you can receive less pension than if you paid the full amount of the national pension insurance premium that you should have paid.

As I mentioned earlier, the amount of pension you can receive will decrease depending on the exemption rate. A reduction in pensions may have a considerable impact on life in old age.

Disadvantages of receiving a deferment of payment of national pension insurance premiums

If you receive the deferment of payment of the national pension premium, the period of deferment will be added to the eligibility period of the old-age basic pension. However, this period is not reflected in the pension amount of the old-age basic pension. It is important to note that the pension will be reduced by the amount of the deferred payment period.

Additional payment system for national pension insurance premiums to prevent disadvantages (decrease in pension amount)

If you receive an exemption or deferment of payment of the national pension premium, the old-age basic pension that you can receive in the future will be reduced. Therefore, we recommend using the additional payment system for national pension insurance premiums. Within 10 years, you can prevent the decrease in the old-age basic pension that you receive by paying the premium later.

In addition, if two years or more have passed from the year following the period of exemption or deferment of payment, a certain amount will be added to the insurance premiums after that. If you do so, the premium will be higher than the original premium, so if possible, it is better to make an additional payment within two years after receiving the exemption or deferment of payment.

If you wish to make additional payments, fill out the required items on the National Pension Insurance Premium Additional Payment Application Form (printed out from the Japan Pension Service National Pension Service Notification / Application List), and be closest to your My Number Confirmation Document and Identity Confirmation Document. Apply at the pension office of. You can also apply by mail. (* 6)

***

When it becomes difficult to pay the national pension premium, if you use the premium exemption or payment deferment system, you can bear the premium burden without affecting the eligibility period for the old-age basic pension that you can receive in the future. Can be reduced.

However, the pension amount of the old-age basic pension will be reduced by the period of exemption or deferment of payment. Therefore, we recommend that you use the additional payment system as soon as possible to eliminate the reduced amount.

Also, if you are in financial difficulty, do not leave it unpaid, but use an exemption or payment deferment system and make additional payments to reduce the impact on your pension as much as possible.

See:
(* 1) Japan Pension Service “National Pension Premium Exemption System / Payment Deferment System”
(* 2) Japan Pension Service “Regarding exemption from national pension insurance premiums due to a decrease in revenue due to the effects of the new coronavirus infection”
(* 3) Japan Pension Service “National Pension Premium Exemption System / Payment Deferment System”
(* 4) National Pension Fund Association “About iDeCo membership qualifications and premiums”
(* 5) National Pension Fund Association “Joining and Qualifications”
(* 6) Japan Pension Service “Additional payment system for national pension insurance premiums”