Things to be considered before participating in DC

投稿者: | 2020-04-23
Syuri Castle in Okinawa prefecture

No withdrawal until age 60


No withdrawal until age 60

This is very important rule regarding DC.

DC has 2 types. One is corporate type and the other is individual type.

In case of individual type, participants are more likely to voluntarily join DC. That is, participants relatively understand it.

On the other hand, in case of corporate type, companies decide to introduce DC and all of employees automatically join DC basically.

So, I have experienced that participants consulted with me owing to lacks of understanding DC.

No withdrawal until age 60 is no exception when participants leaving Japan like foreigners going back to their countries.

NOTICE

When you leave Japan before 60, you must rollover the account balance to an individual type DC and keep them until you reach pensionable age.

Many financial institutions such as banks, securities companies have individual type DC plan, and you need to consult with them as well as DC administrator in your company before leaving Japan.

Of course, when you move to a new employer in Japan, it’s similar.

First, you should confirm whether the new employer has DC plan or not.

When the new employer has a corporate DC plan, you can rollover to the new employer’s DC.

When the new employer doesn’t have one, you must rollover to an individual type DC.

In case that you become a self-employed peson or a full-time housewife, you must also rollover to an individual type DC.

Particularly, when you can choose how much you pay per month in DC, you should take the rule into account. If you don’t have enough money to keep your daily lives, you can’t withdraw DC until age 60.

Since DC has tax advantage, some participants tend to pay contributions too much. I will explain the tax advantage in next article. ⇒Tax incentives for participants in DC

Related articles
Defined Contribution in Japan
Personal Finance in Japan
Japanese National Pension System


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