How Japan's Employees' Pension Is Calculated: The Earnings-Related Part and What Working Past 60 Adds
Japan's employees' pension (the old-age employees' pension) depends on your average income while working and your months enrolled. At an average of 5 million yen, each year you work adds 27,405 yen a year to your pension from 65. This article covers the formula for the earnings-related part, the often-overlooked transitional supplement, how much working past 60 and 65 adds, and when the pension for working seniors suspends it.
The formula for the earnings-related part
The earnings-related part at the core of the old-age employees' pension is calculated with the formula below. Since April 2003, it has included bonuses under the "total remuneration system," so it's easiest to think in terms of annual income.
At an average of 5 million yen for 38 years (456 months), it's 5 million yen ÷ 12 = 416,667 yen × 5.481/1000 × 456 = 1,041,390 yen a year. The actual calculation uses an average after applying revaluation rates that convert past pay to today's wage levels. Periods before April 2003 are calculated on monthly pay excluding bonuses with a multiplier of 7.125/1000, but if bonuses are about 30% of income, the result is almost the same as under the total remuneration system.
| Average income | Added per year worked | 20 years | 38 years |
|---|---|---|---|
| 3 million yen | 16,443 yen | 328,860 yen | 624,834 yen |
| 4 million yen | 21,924 yen | 438,480 yen | 833,112 yen |
| 5 million yen | 27,405 yen | 548,100 yen | 1,041,390 yen |
| 6 million yen | 32,886 yen | 657,720 yen | 1,249,668 yen |
| 8 million yen | 43,848 yen | 876,960 yen | 1,666,224 yen |
The earnings-related part is directly proportional to income and years enrolled, so "income × 0.5481%" is a good estimate of what each year of work adds to your pension. That's 16,443 yen a year at 3 million yen of income, and 43,848 yen a year at 8 million yen. Income above 10.8 million yen (650,000 yen of standard monthly remuneration plus 1.5 million yen bonuses twice a year) isn't counted.
The transitional supplement: time worked before 20 and after 60
Besides the earnings-related part, the employees' pension has a "transitional supplement." It fills the gap between the old fixed part (1,766 yen × months enrolled, up to 480 months) and the basic old-age pension earned from your employees' pension periods, and it's calculated like this.
If you were only in the employees' pension between 20 and 60, the two terms nearly cancel out and the supplement is a few hundred yen (361 yen a year for ages 22 to 60). Months in the employees' pension after 60 or before 20, on the other hand, aren't reflected in the basic pension but add about 1,766 yen (per year) each through the supplement. Working from 22 to 65 makes the supplement 42,745 yen a year.
- If you started work after finishing high school at 18: the 2 years before 20 count toward the supplement and the earnings-related part
- If you keep working as an employee past 60: months after 60 raise both the earnings-related part and the supplement
- Once your total months enrolled reach 480, the supplement stops growing (the earnings-related part keeps growing)
How much working past 60 adds to your pension
This compares the pension from 65 for someone who worked from 22 at an average of 5 million yen and stayed in the employees' pension until 60, 65 or 70. Income after 60 is assumed to stay at 5 million yen.
| Period worked | Earnings-related part | Transitional supplement | Total pension (per year) | Monthly amount |
|---|---|---|---|---|
| 22 to 60 (38 years) | 1,041,390 yen | 361 yen | 1,889,051 yen | 157,420 yen |
| 22 to 65 (43 years) | 1,178,415 yen | 42,745 yen | 2,068,460 yen | 172,371 yen |
| 22 to 70 (48 years) | 1,315,440 yen | 42,745 yen | 2,205,485 yen | 183,790 yen |
Working the 5 years from 60 to 65 adds 179,409 yen a year to your pension. The basic pension stays at the full amount, but the transitional supplement grows, so a year after 60 adds more than a year before 60. Many people's income falls after 60, but your pension still grows with every month worked, even at lower pay. Working from 60 to 65 at 3 million yen, for example, adds 82,215 yen to the earnings-related part and 42,384 yen to the supplement, for a total of 124,599 yen a year.
Pension for working seniors: high pay suspends your pension
If you work in the employees' pension past 60 while receiving the old-age employees' pension, half of any amount by which your pay (standard monthly remuneration + the past year's bonuses ÷ 12) plus your monthly employees' pension exceeds a threshold is deducted from the employees' pension. The threshold rose to 620,000 yen in April 2026.
- It applies only to the employees' pension (earnings-related part). The basic old-age pension isn't reduced
- Example: pay of 450,000 yen + 100,000 yen of employees' pension a month = 550,000 yen, which is under 620,000 yen, so you receive it all
- Example: pay of 600,000 yen + 100,000 yen of employees' pension a month = 700,000 yen, so half of the excess 80,000 yen, or 40,000 yen a month, is suspended
- Suspended amounts don't count toward the increase if you delay claiming
If you work as self-employed or in a way that doesn't enroll you in the employees' pension (short weekly hours, for example), there's no adjustment however much you earn. When planning work and pension together past 60, also look at how unemployment benefit fits in. Unemployment benefit at 60 and 65 explains the difference between leaving at 64 and at 65.
How to calculate your own employees' pension
- 1
Confirm your time in the employees' pension
Check your enrollment history on your Nenkin Teikibin (annual pension notice) for periods as a company employee or public servant. If job changes left gaps, go by the total number of years.
- 2
Estimate your average income
Think of your income (with bonuses) from your early career to now, averaged at today's levels. Dividing "pension based on your enrollment so far" on your Nenkin Teikibin by your months enrolled and 5.481/1000 shows your average so far.
- 3
Try changing how long you work in the Pension Amount Calculator
Setting the end of your employees' pension period to 60, 65 or 70 shows how the earnings-related part and supplement grow. For totals by income, see also the pension table.
Employees' pension premiums come out of your pay at 9.15% (your half of the premium). How social insurance premiums are calculated explains how they're set.
FAQ
- How is the employees' pension calculated?
- The core earnings-related part is average income ÷ 12 × 5.481/1000 × months enrolled. At an average of 5 million yen for 38 years, that's 1,041,390 yen a year. Adding the transitional supplement and the basic old-age pension gives your total pension from 65.
- How much does working one more year add to my pension?
- The earnings-related part grows by income × 0.5481%. That's 27,405 yen a year at 5 million yen, and 16,443 yen a year at 3 million yen. Periods after 60 or before 20 add about another 21,000 yen a year (12 months' worth) through the transitional supplement.
- What's the transitional supplement?
- It's an addition that fills the gap between the fixed part of the employees' pension and the basic old-age pension earned from employees' pension periods. It's almost 0 yen if you only worked between 20 and 60, but it grows if you were in the employees' pension after 60 or before 20. Working from 22 to 65 makes it 42,745 yen a year.
- What's the threshold for the pension for working seniors?
- It's 620,000 yen from April 2026. If your pay (standard monthly remuneration plus bonuses divided by month) and monthly employees' pension total more than 620,000 yen, half of the excess is deducted from the employees' pension. The basic old-age pension isn't reduced.
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