A Worker Nearing Retirement: Which Pension and When
Hiroshi is 63, self-employed since age 40, and previously a salaried employee for 20 years (ages 20–40). He has paid National Pension contributions for 23 years as self-employed. He is considering claiming his National Pension old-age basic pension now, at 63, rather than at 65. His wife, 60, has 25 years of National Pension contributions and has never worked as an employee. Hiroshi asks: (a) whether claiming early reduces his amount permanently, (b) whether his employee years count, and (c) whether his wife can claim anything based on his record.
1. Explain the early-claim reduction and whether Hiroshi's employee years count toward his basic pension.
Read the worked answer
(a) Early claim (繰上げ受給): Claiming the old-age basic pension before 65 reduces the amount permanently. The reduction is 0.4% per month early (for claims from April 2022 onward), so claiming at 63 (24 months early) gives a 90.4% pension for life. The reduction cannot be reversed. Claiming at 63 also means he cannot later switch to a higher amount, and he forfeits certain add-ons.
(b) Employee years count. Years insured under the Employees' Pension (厚生年金) also count as insured months for the National Pension basic pension. His 20 salaried years count toward the 25-year (now 10-year) qualifying period and toward the basic pension amount, alongside his 23 self-employed years. He will receive a basic pension plus an Employees' Pension portion for those 20 years.
Caution: If he claims the basic pension early, he should consider whether the EP portion should be claimed separately at 65, since the two can be claimed at different times.
2. Can Hiroshi's wife claim a pension based on his record, and what is the effect of her own 25 years of contributions?
Read the worked answer
Spouse's added pension (加給年金) vs. her own pension:
Her own basic pension: With 25 years of contributions, she qualifies for her own old-age basic pension. She should claim on her own record, not as a dependent.
Spouse's added pension (加給年金): This is payable to the insured person (Hiroshi) if he has dependent spouse and children, but only if the spouse's own pension is below a threshold. Because his wife has 25 years (a full basic pension), the added pension would generally not be payable - the spouse must be a dependent with a low pension. Also, the added pension attaches to the EP portion, which requires the EP claimant to have 20+ years of EP coverage; Hiroshi has 20 years, so it is borderline.
Timing: The added pension is paid only while the spouse is under 65 and dependent. Once she claims her own basic pension at 65, the added pension stops.
Conclusion: The wife claims her own basic pension; Hiroshi likely cannot claim the spouse's added pension because her own pension exceeds the threshold. This is a common trap - 'dependent spouse' status and 'own pension entitlement' are mutually exclusive for the added pension.