April-June Overtime Raises Your Premiums for a Full Year

The short answer: the average of April to June sets your grade, and it shows up in your October pay for a whole year

Note: the employee's half of health insurance at 9.85% (Japan Health Insurance Association, Tokyo, FY2026) plus employees' pension at 18.3% plus the child-rearing support levy at 0.23%. For ages 40 to 64, long-term care insurance at 1.62% is added and the gap grows by roughly another 10%. Employment insurance premiums are charged on the actual pay each month, so they have nothing to do with the grade.

There are three points to hold on to. First, what counts is the pay "paid" in April, May and June, so at a company that closes the books at month end and pays the following month, it is the overtime worked in March to May that matters. Second, the average covers the gross amount, including overtime pay, commuting allowance and every other allowance. Third, the grade that comes out is used from the September premium (at companies that deduct in the following month, the pay packet in October) through the premium for the following August[Japan Pension Service, annual determination].

How the annual determination (定時決定) and the remuneration report (算定基礎届) work: only months with 17 or more payment basis days are counted

The Japan Pension Service explains that "the average of the remuneration paid over the three months of April, May and June is taken as the monthly remuneration, and the standard monthly remuneration is decided again," and that "it applies from September of that year to August of the following year"[Japan Pension Service]. The detailed rules run as follows.

• Only months with 17 or more payment basis days go into the average (calendar days for monthly salaries, days actually worked for daily or hourly pay). If absences in April bring it down to 16 days or fewer, the average is taken over May and June alone. For part-timers with no month reaching 17 days, months with 15 or more days are used.
• The company files the remuneration report (算定基礎届) by 10 July, and in the autumn you receive a notice of your decided standard monthly remuneration through your employer.
• Who is left out: people who joined on or after 1 June, people who left by 30 June, people whose grade is revised by an interim revision in July, and people who have given notice of an interim revision due in August or September.
• When you join a company, the grade is set from your expected monthly pay (determination on acquiring coverage) and is used until the next annual determination.

The point most often missed is that your company's closing date and pay date decide "which month's overtime" is in scope. With books closed at month end and pay on the 25th of the following month, the overtime worked in March, April and May is what gets paid in April, May and June, so that is what counts. At a company that pays within the same month, it is the April, May and June overtime itself.

Is it really a loss? The premiums go up, but so do your pension and your benefits

A higher grade means more is deducted, but employees' pension and health insurance benefits are proportional to the standard monthly remuneration, so part of it comes back. Comparing the case above (300,000 yen to 360,000 yen, for one year) gives the following.

The 3,946 yen added to your pension keeps coming for life, so drawing it for 25 years from age 65 comes to about 99,000 yen. That is almost exactly the 102,000 yen of extra premiums back again (less if you draw it for a shorter time, more if longer). On top of that, every yen of premium you pay is a social insurance premium deduction, so someone in the 20% bracket sees income tax and resident tax fall by about 30,000 yen. April-to-June overtime is not "money down the drain": more precisely, your take-home pay falls for a year and in exchange your pension and benefit entitlements grow. The pension calculation is set out in how much employees' pension you will receive, and the sickness allowance in how much sickness allowance you get and for how long.

Where the interim revision (随時改定) line falls: a change in overtime alone is out of scope, a change in fixed wages is the doorway

An interim revision (随時改定), filed as a monthly remuneration change report, changes your grade mid-year only when all three of the following apply[Japan Pension Service, interim revision].

1. Fixed wages have changed, through a pay rise, a pay cut or the like. A revision of base pay, a change in the hourly rate, the addition or change of a housing or position allowance, a change in the commuting allowance and so on all count.
2. The three-month average from the month of the change moves the standard monthly remuneration by two grades or more.
3. All three months have 17 or more payment basis days.

The doorway is condition 1, the change in fixed wages. The Japan Pension Service states as a point to note that a case where "fixed wages went up but variable wages such as overtime allowances fell, ... producing a gap of two grades or more" is not in scope, so where only overtime pay has risen or fallen, no interim revision happens however many grades it would move. Conversely, if a pay rise coincides with more overtime and the total moves two grades or more, the new grade applies from the fourth month counting from the month of the change (for an April pay rise, the July premium).

There are three things you can do. Shifting when the overtime falls works; splitting a bonus does not

• Move overtime out of April to June (on a payment-month basis) into other months. If the work can be scheduled, cutting the overtime for March to May (at a company that pays the following month) and pushing it to July or later is the only legitimate option. The overtime pay itself does not shrink, so your take-home pay goes up.
• Do not take one-off allowances or lump-sum payments in April to June. A six-month commuter pass paid as a lump sum in April is spread over the months and counted as remuneration (the rules apportion it even when it is paid in one go).
• Ask your company about the annual average method exception. Only for people who meet the conditions above.

What does not work is manipulating premiums on the company side: splitting a bonus into four or more payments, for instance, turns it into "remuneration" that goes into the standard monthly remuneration, and pension offices audit for exactly that. Take it that the only lever an individual has is timing. Which line on your payslip changes is covered in how to read your payslip, and how to look up your grade in how to check your standard monthly remuneration.

Summary

• The standard monthly remuneration is based on the average salary paid in April, May, and June, and stays fixed for one year from September through the following August.
• If someone earning ¥300,000 a month receives ¥50,000 in overtime pay, their grade rises by two levels, increasing premiums by ¥8,514 a month, or about ¥100,000 a year.
• For companies that pay at the end of the following month, overtime from March through May is what counts. Changes in overtime pay alone do not trigger an off-cycle revision.
• In exchange for higher premiums, future pension benefits and the daily amount of sickness and childbirth allowances also increase.
• What can be done is to shift overtime to other months, or to ask the employer about the special exception for calculating an annual average for employees who are consistently busy every April through June.

Reference links (sources)

This article is based on the materials below. Because your company's payroll closing date and pay date change which months are in scope, check with your HR department.

• Japan Pension Service, annual determination (the remuneration report) (the April-June average, 17 payment basis days, application from September to the following August, who is out of scope)
• Japan Pension Service, interim revision (the monthly remuneration change report) (the three requirements, a change in variable wages alone being out of scope, revision from the fourth month)
• Japan Pension Service, annual determination using the annual average
• Japan Pension Service, collection of premiums (the previous month's premium deducted from the current month's pay)
• Japan Health Insurance Association, FY2026 premium table (Tokyo branch)

Note: this article is general information. The figures are the employee's share for Tokyo, the Japan Health Insurance Association and someone under 40; amounts differ for health insurance societies and other prefectures.