Leaving Japan at 8 Years: Take the Refund or Keep It?

Quick Answer: At eight years you can still take the lump-sum refund — it is only available below ten years. On a ¥400,000 average salary that is ¥2,200,000, capped at 60 months no matter how long you worked, and 20.42% is withheld unless you file to get it back. Keeping the record instead is worth about ¥379,930 a year for life — but only if a social security agreement lets you reach ten years.

Eight years is the cruellest number in the Japanese pension system. Two more and the decision disappears — you would simply have a pension. At eight, you have a genuine choice, a two-year clock, and almost no English-language guidance on how to make it.

This is a labelled worked example, not a real person and not advice. It uses FY2026 figures and a deliberately ordinary case: a company employee who worked eight years on an average standard remuneration of ¥400,000 a month and is leaving at 35. Your own record will differ.

This is educational information, not financial, tax or pension advice. Confirm your position with the Japan Pension Service and a qualified professional.

What can you actually claim at eight years?

The lump-sum withdrawal (脱退一時金) has a condition people read backwards. You qualify for it only if you have not met the ten-year qualifying period — 「老齢年金の受給資格期間（10年間）を満たしていないこと」.

At eight years you have not. So the refund is open to you, and it will close permanently the moment you cross ten.

Two limits shape it. The payment caps at 60 months — five years — for anyone whose final contribution month is April 2021 or later. Your eight years do not all count.

And there is a two-year clock that runs from a date most people get wrong. It starts on the day you lose insured status (資格喪失日), not the day you fly out. Only if you still held a Japanese address on that day does it instead run from when you later gave that address up.

Three traps sit around it, and each one ends the option entirely:

One more structural point: the National Pension and the Employees' Pension are calculated separately. Months in one are never added to months in the other, and each has its own six-month minimum — four months of each adds up to nothing at all.

The full mechanics are in getting your pension refund when leaving Japan, and the eligibility test itself in the 10-year rule.

How much is the refund, exactly?

The employees' pension lump sum is:

Average standard remuneration × 支給率

Where the 支給率 is the contribution rate, halved, times a months figure capped at 60. At the current 18.3% rate that lands at 5.5.

So for our example: ¥400,000 × 5.5 = ¥2,200,000.

It is worth seeing that against what went in. Your own half of the contributions was 9.15% × ¥400,000 × 96 months = ¥3,513,600, and your employer paid the same again on top:

Amount
Your own contributions (96 months) ¥3,513,600
Employer's contributions ¥3,513,600
Total paid in on your behalf ¥7,027,200
Lump-sum refund ¥2,200,000

That is about 63% of your own contributions, and 31% of everything paid in on your behalf — and the shortfall is the cap, not a penalty. Because the 支給率 is your half-rate multiplied by months, an uncapped refund would return your own contributions almost exactly and never a yen of your employer's. Stopping the month-count at 60 is what takes it down to roughly five years' worth of your own half. Months 61 to 96 add nothing.

Then the part that catches people. Paid to someone who has already left, the refund is a retirement allowance to a non-resident, and 20.42% is withheld at source — on the full amount, with no retirement-income deduction and no halving applied first:
Gross lump sum ¥2,200,000
Tax withheld at 20.42% −¥449,240
What actually arrives ¥1,750,760

Much of that ¥449,240 is usually reclaimable. Japan lets a non-resident elect to be taxed on a retirement payment as though they were still resident — the 退職所得の選択課税 under Article 171. In that recomputation the retirement-income deduction applies and the reconstruction surtax drops out altogether, so on a payment this size the residual tax is normally small.

Small is not nothing, though, and two things can move it:

The rest is procedural: you file, and you generally need a 納税管理人 (tax representative) in Japan, which is far easier to arrange before you leave than after.

Most people never do any of it. That is a fifth of the refund left behind for want of a form.

What are you giving up?

Eight years is 96 months. If the record survives:

But read the condition carefully: eight years alone does not reach the ten-year bar. Keeping the record only pays anything if something carries you over the line — and for most people that something is a treaty, not time.

Does the investment maths actually favour the refund?

Here is where the usual advice — "never take the refund" — deserves testing rather than repeating.

Take the ¥2,200,000 at 35, reclaim the withheld tax, invest it for thirty years, and draw 4% a year from 65:

Real return Value at 65 Income at 4%
3% ¥5,339,977 ¥213,599/yr
5% ¥9,508,273 ¥380,331/yr
7% ¥16,746,961 ¥669,878/yr

Set that against the pension's ¥379,930 a year. At a 5% real return the two land within ¥400 a year of each other — on a decision people treat as obvious.

So the honest answer is that it turns on assumptions nobody can guarantee. Below about 5% the pension wins; above it, the invested refund does. And if you don't reclaim the withholding, the whole table shifts down — the 5% case falls to ¥302,667, and the pension wins comfortably.

What the table cannot show is the difference in kind. The pension is index-linked, guaranteed for life, and immune to a bad decade in markets. The lump sum is yours today, can be spent, and carries every risk you take with it. That is a question about your circumstances, not your spreadsheet.

What does a social security agreement change?

This is the option the refund-or-nothing framing hides, and for anyone from an agreement country it is usually the most valuable one.

Where Japan has a social security agreement with your country, contribution periods can be totalised — your Japanese months count toward your home country's qualifying threshold, and your home-country periods can count toward Japan's ten years. Eight years in Japan plus several at home may clear both.

Check that your country actually has that door before you plan around it. Japan has agreements in force with 24 countries, but four of them cover only the elimination of dual coverage and contain no totalisation of periods at all:

United Kingdom · South Korea · China · Italy

If you are covered by one of those four, keeping the record does not let you combine periods toward the 120 months. Unless you expect to return to Japan and finish the ten years yourself, the "keep it" branch has nothing in it — and the refund is usually the sensible call. This single fact flips the decision for a large share of readers, so establish it first.

And here is the trap, which is worse than it first reads. Taking the refund erases every Japanese pension period you held before you claimed — not only the five years it paid you for. The Japan Pension Service puts it without hedging: 「いかなる場合でも、脱退一時金を請求する以前の日本の年金に加入していた期間がすべてなくなります」.

Our example is paid for sixty months and loses ninety-six. And because the erasure spans both schemes even though the calculation does not, any National Pension months go with them — destroyed without being paid for. See Japan's social security agreements.

So the real decision at eight years is not two options but three: take the refund, keep the record and rely on an agreement, or go back for two more years and remove the question entirely — which is what the 12-year worked example looks like.

Is the 60-month cap about to change?

Yes — and if you are sitting at eight years, this is the one piece of timing that could be worth more than any of the arithmetic above.

Japan's 2025 pension reform, passed by the Diet on 13 June 2025, raises the lump-sum ceiling from five years to eight — from 60 months to 96. At the salary in this example that is the difference between ¥2,200,000 and roughly ¥3,513,600, which is your own contributions returned close to in full. The stated reason is that stays have lengthened: three years as a trainee plus five as a specified skilled worker already comes to eight.

The catch is commencement. The change takes effect on a date set by cabinet order, within four years of promulgation. As of today it is not in force, and the 60-month cap is what applies.

That matters because applying is irreversible. If you are leaving with more than five years on the clock, confirm the current position with the Japan Pension Service before you file — claiming under the old cap the month before the new one starts is a mistake you cannot undo. Your two-year window is also thinking time.

Model your own record in the Japan Pension Estimator, and start from Japan pension for foreigners.

Frequently Asked Questions

Can I get the Japanese pension refund if I worked 8 years?

Yes. The lump-sum withdrawal is available only to people who have not met the ten-year qualifying period, so eight years still qualifies. The payment is capped at 60 months of contributions regardless of how long you actually worked. The two-year claim window runs from the day you lost insured status — or, if you still had a Japanese address then, from when you later gave it up.

How much is the lump-sum refund after 8 years?

The employees' pension portion is your average standard remuneration multiplied by a rate that reaches 5.5 at 60 months or more. On ¥400,000 that is ¥2,200,000 gross — but 20.42% is withheld at source, so ¥1,750,760 arrives unless you reclaim it.

Can I get the 20.42% withholding back?

Usually most of it. Japan allows a non-resident to elect to be taxed on a retirement payment as if they were a resident — the 退職所得の選択課税 — which generally reduces the tax substantially, and drops the reconstruction surtax entirely. It is rarely reduced to exactly zero, and any company retirement payment received in the same calendar year is pooled into the same calculation. It requires filing, and normally a tax representative (納税管理人) in Japan, which is much easier to appoint before you leave.

Is it better to take the refund or keep the pension?

It is closer than most advice suggests. At a 5% real return, investing the reclaimed refund for thirty years produces almost exactly what the pension would pay. Below that the pension wins; above it the refund does. The pension is also index-linked and guaranteed for life, which no return assumption captures.

Does my country's agreement with Japan actually allow totalisation?

Not always. Japan has 24 agreements in force, but those with the United Kingdom, South Korea, China and Italy cover only the elimination of dual coverage and contain no totalisation of periods. If you are covered by one of those four, keeping your record does not help you reach the 120 months, and the refund is usually the better call. Check your own country's position before deciding.

Is the lump-sum cap really changing from 5 years to 8?

Yes, it is legislated in the 2025 pension reform, but it is not in force yet. Commencement is set by cabinet order within four years of promulgation, so the 60-month cap still applies today. Since an application cannot be undone, anyone with more than five years of coverage should confirm the current position with the Japan Pension Service before filing.

What happens to my Japanese pension record if I take the refund?

Every period before the claim is erased — not just the sixty months you were paid for, and not just the scheme you claimed under. An eight-year contributor is paid for five years and loses all eight. That matters most where a social security agreement exists, because those years could otherwise have been totalised toward a pension in either country.

PlanTogetherFI is for educational planning only. It is not financial, tax or pension advice. This is a labelled worked example using FY2026 figures, not a forecast for any individual, and the investment returns shown are illustrative assumptions rather than expectations. Confirm your own position with the Japan Pension Service, the NTA, and a qualified professional.

Sources and further reading

Figures reflect FY2026 (April 2026 – March 2027) and are revised each April. Confirm your own record with the Japan Pension Service.