"The National Pension is a losing deal." "You'd be better off investing on your own." We examine these claims, repeated over and over on social media, with numbers rather than emotion. To state the conclusion up front: on average, paying in is clearly more advantageous. That said, there are also "cases where it works out unfavorably" and "legitimate criticisms of the system." This is a both-sides examination for people who don't trust government publicity but can't trust sensationalist videos either.
① The total for 40 years of contributions is about ¥8.4 million (¥17,510/month × 480 months, based on FY2025 amounts). The Old-age Basic Pension is ¥831,700 per year (full amount, FY2025)[MHLW].
② A simple break-even is about 10 years from the start of benefits = age 75. Remaining life expectancy at age 65 is about 19 years for men (age 84) and about 24 years for women (age 89), so with an average lifespan you receive 1.9 to 2.4 times what you paid in.
③ On top of that, half of the benefit is funded by the national treasury (taxes). People who don't pay end up in the most disadvantageous position: "you pay the taxes that fund it but receive no benefit."
④ The premiums are fully deductible as social insurance premiums = the real burden is 20–30% lower. Disability Basic Pension and Survivors' Basic Pension come bundled in as insurance.
⑤ The weak points are facts too: real erosion of value through macroeconomic slide indexing, the risk of dying early, and a structure where even non-payers cannot escape the tax burden. Even so, the cases where "not paying" is rational are very limited.
Test 1: The simple break-even (recovered at age 75)
- Pay in: ¥17,510 × 12 months × 40 years ≒ ¥8.4 million
- Receive: ¥831,700/year (full FY2025 amount)[MHLW]
- Recovery: ¥8.4 million ÷ ¥832,000 ≒ 10.1 years → you break even at age 75
- Remaining life expectancy at age 65: about 19 years for men, about 24 years for women (abridged life table) → on the average picture, total receipts of ¥15.8 million–¥20 million ≒ 1.9 to 2.4 times what you paid in
* These are estimates, since future premium and benefit levels will be revised. Because benefits are for life, the structure of "the longer you live, the more you gain" does not change. Using deferred benefits (start as late as age 75, +84%) strengthens the insurance function further.
Test 2: Three "add-ons" that get overlooked
- (1) Half of the benefit is taxes: One-half of the Basic Pension is funded by the national treasury. In other words, looking only at the benefit corresponding to your own premiums, recovery takes about 5 years. Even non-payers bear this funding through the consumption tax and the like, yet receive none of the benefit. This is the biggest reason "not paying" is structurally a loss.
- (2) The tax effect: Premiums are fully deductible as social insurance premiums. For someone with a 20% tax rate, the real burden of ¥210,000 in annual premiums is about ¥170,000. The same effect applies to back-payment and advance payment.
- (3) The insurance function: If illness or an accident leaves you disabled, there is the Disability Basic Pension (grade 2 is on par with the full old-age amount; grade 1 is 1.25 times); on death, the Survivors' Basic Pension goes to a spouse with children. Buying equivalent lifelong coverage through private disability insurance would cost considerable premiums. If you haven't paid, you can't meet the contribution requirements and not a single yen is paid out.
Test 3: Facing the critics' points head-on
| Criticism | Examination |
|---|---|
| "With the falling birth rate, we won't get anything in the future" | The adjustment of benefit levels (real erosion) is a fact (macroeconomic slide indexing). However, given the structure — reserves of over ¥200 trillion, treasury funding, and a pay-as-you-go system — a "it goes to zero" scenario would mean the collapse of the system = something on the scale of national fiscal bankruptcy, and in that case your self-managed assets wouldn't come through unscathed either |
| "I'd grow it more by investing myself" | The right answer is to invest through iDeCo and NISA on top of the pension. The National Pension is a package of "for life, inflation-adjusted, disability and survivor coverage, tax breaks, and half funded by taxes," and no financial product with the same conditions exists in the market (lifelong annuity insurance is high-cost) |
| "If you die young, it's a losing deal" | That's true. But this is not a loss; it's the nature of "insurance" (the same as your house not burning down despite having fire insurance). On death, the Survivors' Basic Pension and the lump-sum death payment cover part of it |
| "I'd like to pay but can't afford to" | That is exactly what the exemption and payment-postponement system is for. Even with a full exemption you still receive the treasury-funded portion (half of the pension amount) = a world of difference from non-payment |
Conclusion: "Non-payment" is the only choice with no rationale
As far as the numbers go, the rational order is: (1) pay in (and if possible the supplementary pension and back-payment too), (2) if you can't pay, apply for an exemption, and (3) use any spare capacity to add on with iDeCo and NISA. "Leaving it unpaid" means bearing the funding through taxes anyway, receiving no coverage, and taking on the risk of dunning and seizure on top — on examination, the most disadvantageous choice. Being dissatisfied with the pension system is itself legitimate, but if you choose non-payment as a way to express it, the one who loses is not the system but yourself.
FAQ
In how many years do you break even on the National Pension?
By a simple calculation at FY2025 amounts, you pay about ¥8.4 million over 40 years and receive ¥831,700 per year (full amount), so you recover the total contributions about 10 years after benefits start = age 75. Remaining life expectancy at age 65 is about 19 years for men and about 24 years for women, so on average you receive about twice what you paid in.
Isn't it better to invest on my own?
It is rational to invest not as a replacement for the pension but as an add-on. The National Pension comes with lifelong benefits, disability and survivor coverage, a full income deduction, and half the benefit funded by the national treasury — conditions no equivalent private product offers. Use iDeCo and NISA on top of paying the pension.
Won't I be unable to receive it in the future?
It is a fact that benefit levels will erode in real terms (macroeconomic slide indexing), but given the structure of pay-as-you-go plus treasury funding plus reserves, benefits going to zero is a scenario on the scale of national fiscal bankruptcy. If you stop paying because "it's shrinking," you won't even receive the reduced benefit.
I really can't afford the premiums.
Don't leave it unpaid — apply for an exemption or payment postponement. Even with a full exemption, one-half of the pension amount (the treasury-funded portion) is reflected in the future, and the contribution requirements for the disability and survivors' pensions are preserved. Non-payment and exemption produce completely different results.
Sources of the data
- FY2025 pension amounts (Old-age Basic Pension full amount ¥831,700 / revision rate): MHLW — On the FY2025 pension amount revision (in Japanese)
- Premium amount (¥17,510/month): Japan Pension Service (in Japanese) / Exemption system: Japan Pension Service — Exemption and payment postponement (in Japanese)
- Remaining life expectancy: MHLW abridged life table
* Future premium and benefit levels and the tax system may change. This article is a general examination based on the system as of June 2026; individual gains or losses differ by contribution history, health condition, and other factors.