1. What Is the Lump-sum Withdrawal Payment?
Japan's public pension system generally requires at least 10 years of coverage before you can receive a pension in the future.
This means that if you have worked for a company in Japan and been enrolled in Employees' Pension Insurance, but leave Japan with less than 10 years of coverage, you would receive nothing in return for the premiums deducted from your salary.
The Lump-sum Withdrawal Payment exists to address this. It allows eligible foreign nationals leaving Japan to receive a single payment calculated on the basis of their pension enrollment period.
The following explains the process for those who were employed by a company in Japan and enrolled in Employees' Pension Insurance.
2. Who Can Claim
You can claim the Lump-sum Withdrawal Payment under Employees' Pension Insurance if you meet all of the following requirements (per the Japan Pension Service):
- You do not have Japanese nationality
- You are not currently insured under the Japanese public pension system (Employees' Pension Insurance or the National Pension)
- Your Employees' Pension Insurance Enrollment Period (including any Mutual Aid Association System Enrollment Period) is 6 months or more
- You do not meet the Qualification Period for the Old-age Pension, which is 120 months (10 years)
- You were never eligible to receive a Disability Employees' Pension (including a disability allowance) or a similar benefit
- You do not have an address in Japan
- Less than 2 years have passed since you last lost your insured status under the public pension system
- Note: If you still had an address in Japan on the date you lost insured status, the 2-year period runs from the date you first ceased to have an address in Japan thereafter
Watch the Filing Deadline
The Lump-sum Withdrawal Payment is not paid automatically — a claim must be filed. You may file it yourself, or have a representative file on your behalf by submitting a letter of attorney (the same applies if you want documents sent to a representative).
As noted above, the claim must be filed within 2 years of the date you ceased to have an address in Japan. Once this deadline passes, you can no longer claim, so we recommend acting promptly after you leave.
3. How to File and What You Need
Where and How to File
Claims are filed with the Japan Pension Service, either by post or through electronic filing. Depending on the system you were enrolled in, you may be asked to file with a mutual aid association instead.
Required Documents
You submit the Lump-sum Withdrawal Payment Claim Form together with the following:
| Document | Notes |
|---|---|
| Copy of your passport | The pages verifying your name, date of birth, nationality, signature, and status of residence |
| Documents verifying that you no longer have an address in Japan | A copy of your deleted residence record (住民票の除票 / juminhyo no johyo), etc. If you submitted a Moving-out Notification to your municipality before leaving Japan, this document is not required |
| Documents verifying your bank account | Must show the bank name, branch name, branch address, account number, and that the account holder is the claimant. A certificate issued by the bank is typical. You can designate an overseas bank account |
| Documents clarifying your Basic Pension Number | Such as the Basic Pension Number Notice or Pension Handbook. A copy is acceptable |
| Letter of attorney | Required if a representative files on your behalf, or if documents are to be sent to a representative |
The claim form can be downloaded from the Japan Pension Service website. Forms and completion examples are available in English and a number of other languages.
4. The Payment Notice and Withholding Tax
When your Lump-sum Withdrawal Payment is remitted, the Japan Pension Service will also send you the Notice of Lump-sum Withdrawal Payment Determination at your address overseas.
Looking at this notice, you will see that income tax has been withheld from the payment amount.
Why Tax Is Withheld
Under Japanese income tax law, a Lump-sum Withdrawal Payment received by a non-resident is treated as retirement income. For non-residents, the portion of retirement income corresponding to the period of residence in Japan is subject to withholding at the source.
The Rate
Income tax withheld (including the Special Income Tax for Reconstruction) is 20.42% of the payment amount.
5. Recovering the Tax by Filing a Tax Return (Taxation on Retirement Income at the Taxpayer's Option)
Filing a Tax Return Can Result in a Refund
When a person residing in Japan (a resident) receives retirement income, tax is calculated after subtracting the retirement income deduction.
A non-resident, by contrast, receives no retirement income deduction — income tax of 20.42% is withheld on the gross payment amount.
For this reason, non-residents are permitted to elect to be treated as if they were residents of Japan, and to have the tax recalculated on that basis. This is known as taxation on retirement income at the taxpayer's option (退職所得の選択課税).
By submitting the Tax Return for Refund Due to Taxation on Retirement Income at the Taxpayer's Option and applying the retirement income deduction, you can recover the excess tax that was withheld.
Key Points When Filing
- The return can be filed on or after 1 January of the year following the year in which you received the payment
- The return is submitted to the tax office with jurisdiction over your final address or place of residence in Japan
- Before leaving Japan, you must submit a Notification of Tax Agent for Income Tax/Consumption Tax to that same tax office. If you leave without doing so, submit it together with your tax return
- The original Notice of Lump-sum Withdrawal Payment Determination must be sent to your tax agent, as it is required to file the return
6. Summary
The Lump-sum Withdrawal Payment involves two separate procedures — one on the pension side, one on the tax side:
- Pension side — File your claim with the Japan Pension Service (within 2 years of losing your address in Japan)
- Tax side — File a tax return under taxation on retirement income at the taxpayer's option in the following year or later, to recover the 20.42% withheld
These two steps need to be handled together. In particular, submitting the Notification of Tax Agent before you leave Japan makes everything that follows far smoother.
One-Stop Support from Our Office
The pension claim falls within the professional scope of a certified social insurance and labor consultant (sharoshi), while the tax refund claim falls within that of a certified tax accountant (zeirishi). Engaging two separate professionals means two points of contact and extra effort passing information between them.
Our office works together with a social insurance and labor consultant to handle the process from the Lump-sum Withdrawal Payment claim through to the income tax refund. You deal with a single point of contact, and receive advice that accounts for both the pension and tax sides.
We can also act as your tax agent. Once you leave Japan you will no longer have an address here, so you need a tax agent to receive documents from the tax office and file your return on your behalf. This allows the entire process to be completed while you are overseas.
Handling these procedures from abroad after you have left is demanding, and the deadlines are firm. If you have any concerns, please contact us as early as possible — ideally before you depart.