Anyone having spent any reasonable length of time realizes that April signals a "new start" in Japan. Television commercials abound with cherry blossoms and new randozeru backpacks on the backs of shiny-faced first graders, and the subways are filled with fresh graduates making their first tentative forays into the adult world. Along with ill-fitting black recruit suits and kangeikai, April is also the start of the new fiscal year for most Japanese corporations, schools, and government offices.
What does this mean for the average Frugalite? Well, if you're employed full-time by an employer which already calculates your pension, health insurance, and local tax requirements, then you probably won't notice much difference. If anything, you might see a slight raise or up in your vacation days as you attain seniority. If, however, you are self-employed, part-time employed, a student, or anything other than a salaryperson, you might do well to note that there are some major expenses due coming in June.
Why June? Well, in addition to everything else, health insurance, pension, and local tax payment cycles "restart" every April. Local residents' tax (jyuminzei), National Pension (kokumin nenkin), and National Health Insurance (kokumen kenko hoken) payments are typically based on your prior year's income, calculated for 2006 from your January-December 2005. These figures are usually available early in the following year, with the exception of persons who have adjustments from kakuteishinkoku (tax returns) filed in February/March.
However, the new payment packs (a stack of payments slips for pension, NHI, and residents' taxes) reflecting revised income for the prior year are usually sent out in May, with payment beginning in June. As the prior packs run out in March (for pension and NHI) or January (for quarterly expenses such as residents' taxes), you can often find yourself with a sudden surge in expenses due after a several month break. If you changed jobs in the prior year, or quit your job, you might find it doubly difficult, as you'll likely be taxed on your higher income from the year earlier. Private insurance plans, school fees, neighborhood dues, and other annual bills also often come due in April/May/June, making it a tough time of year indeed.
To avoid a lean summer, I recommend starting to set aside money ahead of time, as with any anticipated large payment on the horizon. This strategy can also save you money (and time) in the future. For example, if you pay into the kokumin nenkin pension, did you realize you could save Y2,950 on your annual pension payments if you pay all at once, in cash? And you can save Y3,490 annually if you pay all at once using automatic bank withdrawal (annual total reduced from Y166,320 to Y162,830). While this does require advance registration (available during March from the following Japanese website: http://www.sia.go.jp/top/gozonji/gozonji03.htm), it could save you a significant amount of money. Tax payments and NHI payments are also discounted slightly when paid in full or in half-year installments instead of monthly. If you have the cash available, why not pay in full?
There are still three months until the June payments start, and one can definitely get a head start by setting aside a portion of your monthly paycheck to meet these one-time expenses. Good luck! Also note that the annual window for tax return filing (kakutei shinkoku) closes on March 15th. Tax filing centers get crowded towards the end of the period, so try and get there early.
(Searching for information on Japanese pension benefits in English? The Social Insurance Agency just updated its English homepage. Take a look here: http://www.sia.go.jp/e/index.html)
By Wendy J. Imura. Copyright 2006.