Leaving Japan? How Nepali workers claim the nenkin lump-sum refund, and the 20.42% tax you can get back

A friend's younger brother came back from Saitama last Asar after two years in a language school and three on a Specified Skilled Worker visa in a food factory. He brought a suitcase, a rice cooker, and a payslip folder he had never opened. Every month for five years, a line on that payslip had gone to kosei nenkin. He thought it was a tax. It was closer to a savings account with a claim deadline.

There were roughly ¥1.3 million sitting in that account, plus a quarter of a million yen of tax he could get back with one extra form. Japan does not post either to you. You have two years to ask.

Why this matters to so many Nepali households

Japan's Immigration Services Agency counted 300,992 Nepalis living in Japan at the end of 2025, the fifth-largest foreign community and up about 68,000 in a single year. Most are students or workers on two- to five-year stays, which is the exact profile the lump sum was built for.

Nepal has no social security agreement with Japan. The Japan Pension Service's list has 24 countries with agreements in force, including India, China, Korea and the Philippines. Nepal is not on it, so years worked in Japan cannot be added to anything back home. For a Nepali worker, the contributions either come back as a lump sum or are lost.

If you are still planning the trip, the Japan cost post covers what the language-school and SSW routes cost going in. This post covers what you take out.

Who can claim

The Japan Pension Service sets four conditions in its claim form, and you need all of them:

1. You are not a Japanese national.
2. You have 6 months or more of paid National Pension contributions, or 6 months or more enrolled in Employees' Pension Insurance.
3. You no longer have an address in Japan.
4. You have never been eligible for a Japanese pension, including disability benefits.

The fourth condition shuts out long stays. Anyone with 120 months (10 years) or more of eligibility period qualifies for the old-age pension and cannot take the lump sum.

Student months need a second look. Many language-school students apply for the student payment deferment on National Pension. On the form's wording, the refund counts contribution-paid months, so deferred months should not add to the payout. Check your Pension Handbook record before you assume a number.

How much you get: kosei nenkin

If your employer deducted pension from your payslip, you were in Employees' Pension. The formula is your average standard monthly remuneration (including standard bonuses) times a payment rate. For anyone whose last month of coverage is April 2021 or later, the rates are:

Rates from the Japan Pension Service claim form; yen amounts are my calculation. "Standard remuneration" is a bracketed grade, not your exact salary, so your real figure will land near these, not on them.

The cap was raised from 36 to 60 months in April 2021. Two catches follow from it.

First, months above 60 are not paid. Second, claiming cancels all your months. The Pension Service's own example is a worker with 90 months who is paid for 60 and loses all 90. If you might work in Japan for 10 years and draw a real pension, the lump sum is a decision, not a formality.

The same form tells repeat workers to claim after each stay. Its example is a technical intern who claims after 36 months, then returns as an SSW worker and later claims again.

How much you get: kokumin nenkin

Students, and anyone not on an employer's scheme, pay into National Pension instead. That refund is a fixed amount set by the fiscal year of your last paid month:

Source: Japan Pension Service claim form, FY2026 edition.

No tax is withheld on this one. The student-then-SSW worker usually has both kinds of months and gets two separate payments.

The 20.42% and how to get it back

On the kosei nenkin lump sum only, Japan withholds 20.42% income tax at source because you are now a non-resident. On ¥1,375,000 that is ¥280,775, leaving ¥1,094,225 in your hand.

Most of that withholding is refundable. Japan lets you treat the lump sum as retirement income instead, and retirement income gets a large deduction: ¥400,000 per year of service, with a minimum of ¥800,000. The National Tax Agency's own filing sample shows a ¥291,478 lump sum with ¥59,519 withheld and ¥0 tax due.

My calculation using the NTA's method. Counting pension months as "years of service" follows the NTA sample; your tax agent or tax office confirms the final figure.

The steps:

1. Before you fly, file the tax agent notification (nozei kanrinin) with the tax office for your last address. The agent needs no qualification beyond living in Japan. A trusted friend, a senpai from the factory, or a paid service will do. If you already left without one, the notification can go in alongside the return.
2. When the pension arrives, the Pension Service posts a payment determination notice. Send the original to your agent.
3. From 1 January of the following year, the agent files the retirement-income election return. A payment decided in 2026 goes on the 2026 return, filed from January 2027.

There is no single published deadline for the refund return. Refund rights in Japan generally run for five years from when you could first file, so treat it as five years from that 1 January and confirm with the tax office. Do not leave it that long.

Filing the claim

You can claim from Nepal by post, or before departure. To claim in Japan, file your moving-out notice (tenshutsu todoke) at the city office first. The Pension Service must receive your claim on or after the date your residence record is deleted, because you cannot have a Japanese address on the day it arrives.

Attach:

• A copy of your passport pages showing name, date of birth, nationality, signature and status of residence.
• Proof you no longer live in Japan. Skip this if you filed the moving-out notice.
• Bank proof showing bank name, branch, branch address, account number and that the account is yours.
• Your Basic Pension Number, from the Pension Handbook or the number notice.

Mail it to Japan Pension Service (Foreign Business Group), 3-5-24 Takaido-Nishi, Suginami-ku, Tokyo 168-8505. The form comes in English, and the Pension Service also publishes a Nepali-language version on the same page.

One trap catches people who fly home on a re-entry permit "just in case." If you leave on a re-entry permit without filing the moving-out notice, you still count as insured and cannot claim until the permit expires. That eats into the time you have to decide.

Getting it into a Nepali bank

The claim form is explicit: payments to countries outside its named currency list, Nepal included, are remitted in US dollars. Your Nepali bank must have a SWIFT/BIC code on the form, or the transfer cannot be sent. A Japanese bank account also works, but Japan Post Bank (Yucho) accounts are not accepted.

The dollars land in your account and are converted at the bank's buying rate, so compare it with NRB's published rate on the day. Intermediary and inward charges vary by bank and I could not find a published schedule, so ask your branch before giving them the SWIFT code. The NRB exchange-rate post explains the gap between NRB's rate and the counter rate.

Whether Nepal taxes this money once you are a resident again is not settled in any IRD guidance I could find. Nepal taxes residents on worldwide income, its only pension exemption covers foreign military and police pensions, and it has no tax treaty with Japan. The returnee money checklist covers the 183-day residency rule. A refund of your own contributions has a reasonable case for not being fresh income, but get a tax advisor's view in writing before filing your first Nepali return.

The rule change coming, but not yet

Japan's 2025 pension reform law (Act No. 74 of 2025, promulgated 20 June 2025) changes the lump sum in two ways, per the Health Ministry's summary:

• The cap rises from 5 years to 8 years.
• No lump sum will be paid to anyone who left on a re-entry permit while that permit is still valid.

Both start on a date set by cabinet order, within four years of promulgation, so by June 2029 at the latest. As of November 2026 no date has been fixed, and the Pension Service's form still uses 60 months. If you are mid-stay with more than five years ahead, the eventual higher cap may pay you more for months 61 to 96.

What you actually need to know

• Two years from your move-out date, then it is gone. File before you leave, or post the claim from Nepal, but do not wait for Japan to remind you.
• Appoint a tax agent before boarding. At five years or less of service, the 20.42% withheld on kosei nenkin is usually refundable in full. On ¥1.375 million, that is ¥280,775 you otherwise leave behind.
• Claiming wipes every month you paid. Fine for a five-year stay; think hard if a 10-year Japanese pension is realistic for you.

Back from Japan and unsure what your payslips add up to? Email [email protected] with your months of coverage and average pay, and I will work through the numbers with you.

This post is part of the Nepal Money Basics guide — the earn-more section.