This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
The ceiling on the standard monthly remuneration (標準報酬月額) for employees' pension insurance (厚生年金) rises from ¥650,000 to ¥680,000 in September 2027. It then goes to ¥710,000 in September 2028 and ¥750,000 in September 2029, in three steps. Premiums rise only for people whose monthly remuneration, excluding bonuses, is ¥665,000 or more. The employee's share goes up by ¥2,745 to a maximum of ¥9,150 a month, and the employer pays the same again. Future pension benefits rise in step[MHLW, outline of the Pension Reform Act (in Japanese)].
You often hear that "people earning ¥7.98 million a year or more" are affected. That is simply ¥665,000 a month times 12. What decides it is not annual income but the average of your April-June pay. If a large share of your pay comes as bonuses, you may be outside the change even on ¥10 million a year.
The short answer: premiums rise from September 2027 if monthly remuneration is ¥665,000 or more
| Monthly remuneration (excl. bonuses) | From Sep 2027 | From Sep 2028 | From Sep 2029 | Final increase (per year) |
|---|---|---|---|---|
| Under ¥665,000 | No change | No change | No change | ¥0 |
| ¥665,000-¥695,000 | +¥2,745 | +¥2,745 | +¥2,745 | +¥32,940 |
| ¥695,000-¥730,000 | +¥2,745 | +¥5,490 | +¥5,490 | +¥65,880 |
| ¥730,000 or more | +¥2,745 | +¥5,490 | +¥9,150 | +¥109,800 |
* Monthly increase in the employee's share. The bands come from the Ministry of Health, Labour and Welfare (MHLW); the amounts are this site's calculation at half the 18.3% premium rate (9.15%)[MHLW, same document, p.5 (in Japanese)]. The employer's share rises by the same amount.
The ¥650,000 ceiling is roughly twice the average standard monthly remuneration of all insured people[MHLW, phased increase in the ceiling (in Japanese)]. 9.6% of insured men are at the ceiling, and 6.5% (2.78 million people) of men and women combined. Other money changes in 2027 are collected in what changes in 2027.
Are you affected? It turns on April-June "monthly remuneration", not annual income
The test uses the average pay received each April to June. That figure is matched to a band, which becomes your standard monthly remuneration for one year from September[Japan Pension Service, employees' pension premiums (in Japanese)].
- Monthly remuneration includes basic pay plus overtime and commuting allowances
- Bonuses are left out. They are assessed separately as the "standard bonus amount", and the ¥1.5 million cap per payment does not change
- People at ¥635,000-¥665,000 stay at a standard remuneration of ¥650,000 even after the ceiling rises
- Heavy overtime in April-June can push you into a higher band for that year
At the same annual income, the share paid as bonuses changes the result a great deal. The table splits annual income into monthly pay and bonuses.
| Annual income | No bonus (income / 12) | Bonus of 2 months (/ 14) | Bonus of 4 months (/ 16) |
|---|---|---|---|
| ¥8 million | ¥667,000 a month → +¥2,745 | ¥571,000 → no change | ¥500,000 → no change |
| ¥9 million | ¥750,000 a month → +¥9,150 | ¥643,000 → no change | ¥563,000 → no change |
| ¥10 million | ¥833,000 a month → +¥9,150 | ¥714,000 → +¥5,490 | ¥625,000 → no change |
| ¥12 million | ¥1,000,000 a month → +¥9,150 | ¥857,000 → +¥9,150 | ¥750,000 → +¥9,150 |
* Monthly increase in the employee's share from September 2029. This site's rough figures, assuming monthly pay including allowances is level for 12 months.
You can find your standard monthly remuneration by dividing the employees' pension premium on your pay slip by 9.15%. ¥59,475 means you are at the ¥650,000 ceiling. See how to look up your standard monthly remuneration.
How much more each month? Up to ¥9,150 for the employee, and health insurance does not change
Only the employees' pension premium rises. The 18.3% rate stays fixed; the standard remuneration it is applied to goes up.
| Standard monthly remuneration | Premium (employee) | Premium (employer) | Employee increase (per year) |
|---|---|---|---|
| ¥650,000 (current ceiling) | ¥59,475 | ¥59,475 | - |
| ¥680,000 | ¥62,220 | ¥62,220 | ¥32,940 |
| ¥710,000 | ¥64,965 | ¥64,965 | ¥65,880 |
| ¥750,000 | ¥68,625 | ¥68,625 | ¥109,800 |
Source: matches the premiums in the MHLW document[MHLW, same document, p.5 (in Japanese)]. The MHLW web page rounds the employee's increase to "¥9,100 a month".
Health and long-term care insurance use a separate band table with a ceiling of ¥1.39 million (grade 50)[Japan Health Insurance Association, FY2026 premium table for Tokyo (in Japanese)]. It already has ¥680,000, ¥710,000 and ¥750,000 bands, and this reform does not touch it.
- Employees' pension: the ceiling rises from ¥650,000 to ¥750,000
- Health insurance, long-term care and the child support levy: ceiling stays at ¥1.39 million
- Employment insurance: no bands or ceiling; the rate applies to actual pay
For the full picture of social insurance premiums, see social insurance premiums by monthly pay.
Take-home pay falls by less than the premium rise, because the deduction lowers your tax
The extra premium is fully covered by the social insurance premium deduction (社会保険料控除). Income tax and resident tax fall a little, so the drop in take-home pay is about 70% of the premium increase.
- From September 2027 the standard remuneration goes from ¥650,000 to ¥680,000. The employee premium rises by ¥32,940 a year
- At a 20% income tax rate (20.42% with the reconstruction surtax) and 10% resident tax, tax falls by about ¥10,000 a year
- The net fall in take-home pay is about ¥22,900 a year (about ¥1,900 a month)
MHLW also shows the real increase, assuming 23% income tax and 10% resident tax. It is about ¥6,100 a month in the ¥750,000 band, about ¥3,700 at ¥710,000 and about ¥1,800 at ¥680,000[MHLW, same document, p.5 (in Japanese)].
The resident tax cut starts in June of the following fiscal year. Income tax adjusts automatically in year-end adjustment. For the overall tax picture around ¥10 million a year, see tax on a ¥10 million income.
How much more pension? About ¥5,000 a month for 10 years in the ¥750,000 band
What you pay feeds into the earnings-related part of the old-age employees' pension, which you then receive for life. Only the periods after the ceiling rises count.
Average standard remuneration × 5.481/1,000 × months covered
One year with standard remuneration ¥100,000 higher adds about ¥6,600 a year to the pension (¥100,000 × 5.481/1,000 × 12).
| Standard monthly remuneration | After 1 year in the band | After 10 years in the band |
|---|---|---|
| ¥680,000 | about ¥150 a month | about ¥1,500 a month |
| ¥710,000 | about ¥300 a month | about ¥3,000 a month |
| ¥750,000 | about ¥510 a month | about ¥5,100 a month |
Source: MHLW estimate (FY2024 prices, for life)[MHLW, same document, p.5 (in Japanese)]. The formula above gives figures a little under 10% higher.
- The employee's extra premium is ¥32,940 in year 1, ¥65,880 in year 2, then ¥109,800 a year for 18 years. Total about ¥2.07 million
- The pension rises by about ¥124,000 a year (about ¥10,300 a month), paid for life from 65
- In gross terms you break even about 17 years into retirement, around age 82
Life expectancy at 65 is 19.52 years for men and 24.38 years for women[MHLW, same document, p.5 (in Japanese)]. Living to the average means you come out ahead, but not by much. For your overall pension, see how much employees' pension you will get.
Premiums are not only a question of profit or loss. The earnings-related part is also used to calculate disability and survivors' employees' pensions, so your cover in an emergency grows too.
Employers pay the same increase: time to revisit directors' pay
Premiums are split equally, so the company also pays up to ¥9,150 a month, or ¥109,800 a year, more per person. In a one-person company, the employer's and the employee's share come out of the same pocket.
- With directors' pay of ¥750,000 a month or more, company and individual together pay ¥219,600 a year more
- Directors' pay can in principle be changed only within three months of the start of the business year
- Cutting pay to hold down premiums cuts the future pension by the same logic
- The bonus cap (¥1.5 million per payment) does not change, which shifts the comparison with pre-notified fixed bonuses
April-June 2027 pay sets the band from September, so for a March year-end company the pay agreed at the June 2027 shareholders' meeting is the first to count. See how to set directors' pay.
Who it suits less, and caveats: ¥750,000 may not be the end
Who is likely to benefit from the extra
- People expecting to draw a pension for a long time after 65
- People expecting to earn above the ceiling for 10 years or more
- People who want larger survivors' pensions for their family
Who bears the cost first
- People leaving employees' pension within a few years to go independent or retire
- People whose mortgage or education costs already stretch current take-home pay
- Business owners with many staff, facing a large rise in the employer's share
- The ceiling can move again. The reform also adds a rule letting the ceiling be revised according to the share of people in the top band[MHLW, same document, p.1 (in Japanese)].
- Pension amounts move with prices and wages. The estimates are at today's prices.
- The take-home cut is certain; the pension assumes a long life. You pay now and collect 20 or more years later.
When does the deduction from pay change? Around the pay received in October 2027
- Your monthly remuneration is set by the average pay received in April-June 2027.
- In July 2027 the employer files the annual remuneration notification.
- The new bands (ceiling ¥680,000) apply from the premium for September 2027.
- Premiums are normally deducted from the following month's pay, so at most companies the deduction changes with pay received in October.
2028 and 2029 follow the same pattern, with the ceiling rising from the September premium each time. If a pay rise changes your pay sharply, an interim revision may move your band before September.
What to do today
- Check whether the employees' pension premium on your latest pay slip is ¥59,475 (the ceiling).
- Work out whether your monthly pay excluding bonuses (including overtime and commuting allowances) is above ¥665,000.
- If it is, plan the household budget for take-home pay about ¥2,000-¥6,000 a month lower from October 2027.
Summary
- The cap on the standard monthly remuneration for employee pension will rise from ¥650,000 to ¥680,000 in September 2027, to ¥710,000 in September 2028, and to ¥750,000 in September 2029.
- Only those with monthly remuneration (excluding bonuses) of ¥665,000 or more will see higher premiums. The employee's share rises by between ¥2,745 and up to ¥9,150 a month, with the company matching the amount.
- Eligibility is based on the average salary from April to June, not annual income. People with large bonuses may be excluded even with ¥10 million in annual income.
- The increased premium is eligible for the social insurance premium deduction, so the reduction in take-home pay is only about 70% of the premium increase.
- Check whether the employee pension premium on your pay slip is ¥59,475 (the current cap).
References (sources)
- MHLW, outline of the Act to Strengthen the Functions of the Pension System (in Japanese) - effective dates, remuneration bands, changes in premiums and pensions
- MHLW, phased increase in the ceiling on standard monthly remuneration (in Japanese)
- MHLW, explanatory material on the Act, detailed version (in Japanese) - premiums and pensions after 20 years
- Japan Pension Service, employees' pension premiums (in Japanese) - 18.3% rate, bands, annual assessment, bonus cap
- Japan Pension Service, old-age pension guide FY2026 (in Japanese) - formula for the earnings-related part
- Japan Health Insurance Association, FY2026 premium table for Tokyo (in Japanese) - health insurance bands and the ¥1.39 million ceiling
* The tables and estimates are this site's rough figures, applying the MHLW bands and premium rate. This article is general information. For individual decisions, consult your employer, a pension office or a tax accountant.
