What changes
Employees' Pension contributions are charged at 18.3% of standard monthly remuneration, split equally, but the remuneration counted is capped. The cap is currently 650,000 yen a month. Under the 2025 pension reform law (Act No. 74 of 2025, promulgated 20 June 2025) it rises in three steps:
- September 2027: 680,000 yen.
- September 2028: 710,000 yen.
- September 2029: 750,000 yen.
For someone at or above the cap, the monthly pension contribution rises from 118,950 yen (59,475 yen each side) to 137,250 yen (68,625 yen each side) by September 2029. Future pension benefits rise too, because they are earnings-related. The bonus cap of 1.5 million yen per payment is not part of this change, and the health insurance cap of 1.39 million yen is separate.
September is when the annual reset of standard monthly remuneration takes effect, so the new grade first appears in contributions deducted from September or October pay, depending on your payroll practice.
Who it applies to
Every employer, for employees whose monthly remuneration, including allowances, commuting pay and in-kind benefits, is above about 635,000 yen. At foreign subsidiaries that is most managers and all senior hires.
Action for employers
- Budget the increase. By September 2029 the employer pays 9,150 yen a month more for each employee at the cap, about 110,000 yen a year. Include it in fiscal 2027 to 2029 headcount costs.
- Tell senior staff. Net pay falls by the same amount on the employee side; expect questions in September 2027.
- Update offer models. Gross-to-net calculations and cost-to-hire figures for senior candidates should use the cap that applies when they start.
- Check payroll settings. Confirm your provider will apply the new grades automatically from the September 2027 reset.
Sources
- Employees' Pension Insurance Act, Article 20, as amended by Act No. 74 of 2025.
- Ministry of Health, Labour and Welfare, explanatory materials on the 2025 pension reform law (raising the upper limit of standard monthly remuneration).