What changes
Under the in-service pension rules, an employee who draws an old-age Employees' Pension while still enrolled loses half of every yen by which pay and pension together exceed a threshold. The 2025 pension reform law (Act No. 74 of 2025, promulgated 20 June 2025) raised that threshold from 500,000 yen to 620,000 yen, both expressed at fiscal 2024 wage levels. The threshold is indexed to wages each year, so the figure that applies from April 2026 is 650,000 yen, against 510,000 yen in fiscal 2025.
Pay here means the standard monthly remuneration plus the year's standard bonus amounts divided by 12. Pension means the monthly old-age Employees' Pension, not the basic pension. If pay is 450,000 yen and pension 100,000 yen, the total of 550,000 yen is now below the threshold and the pension is paid in full; under the old figure, 20,000 yen a month would have been withheld.
The ministry expects about 200,000 more working pensioners to receive their full pension.
Who it applies to
Employees aged 60 and over, most often re-employed staff past retirement age, senior hires in their sixties and advisers on the payroll who are already drawing an old-age Employees' Pension.
Action for employers
- Revisit pay caps for re-employed staff. Many employers set senior pay to stay under the old 510,000 yen line. There is now room to pay more, or offer more hours, without a pension cut.
- Use it in senior hiring. A candidate in their sixties can accept a higher salary than before without losing pension; factor it into offers.
- Recheck every April. The threshold is revised annually with wages, so confirm the new figure before each fiscal year's pay decisions.
- Explain it to affected staff. The Japan Pension Service applies the cut automatically; employees often do not know the threshold has moved.
Sources
- Employees' Pension Insurance Act, Article 46, as amended by Act No. 74 of 2025.
- Japan Pension Service, notice on the revision of the in-service old-age pension system (threshold of 650,000 yen from April 2026).
- Ministry of Health, Labour and Welfare, explanatory materials on the 2025 pension reform law.