How it works
You choose how much to pay in each month, within a limit, and choose the funds it goes into. Your contributions are deducted from your taxable income, which lowers your income and resident tax. Gains inside the account are not taxed while you are saving.
The catch is that the money is locked. You can generally take it out only from age 60, when you have paid in for at least ten years, and later if you have been paying for a shorter time. Taking it out as a lump sum or as a pension has its own tax rules and deductions, and the withdrawal is not tax-free.
Monthly contribution limits
| Who | Now | From December 2026 |
|---|---|---|
| Self-employed and others in category 1 of the pension | ¥68,000 | ¥75,000 |
| Employees with no company pension | ¥23,000 | ¥62,000 |
| Employees with a company pension | Lower limits | iDeCo and the company pension combined up to ¥62,000 |
The 2026 changes
From 1 December 2026, the monthly limits go up, as the table shows. The age to join is also being extended from under 65 to under 70, with conditions. Check with your provider how the changes apply to you and when to change your contribution.
Costs
iDeCo has fixed fees: a few thousand yen to open the account and a few hundred yen a month, paid whatever your balance. Providers add their own fees on top, and many online providers charge none. The funds charge their own annual fees. Because the fixed fees do not shrink with a small amount, check whether iDeCo fits if you can only pay in a little.
Foreign residents
Foreign residents who are in Japan's pension system can usually join. The money is locked until age 60, even if you leave Japan, and a lump-sum withdrawal for people who leave exists only in narrow cases. If you may leave Japan within a few years, compare iDeCo with the pension lump-sum refund for people leaving Japan and with other ways to save.
Points to remember
- Only put in money you will not need before 60. The tax relief is a trade for lost access.
- Employer pension and your category in the pension system decide your limit, so check which one applies to you.
- Compare providers on fees and funds. They are free to open an account with, and you can switch later.
- It is worth keeping fees low, because the money stays invested for decades.
Words you will see
- 個人型確定拠出年金 kojin-gata kakutei kyoshutsu nenkin
- iDeCo, individual-type defined contribution pension
- 掛金 kakekin
- monthly contribution
- 運営管理機関 un'ei kanri kikan
- iDeCo provider
- 所得控除 shotoku kōjo
- income tax deduction
- 老齢給付金 rōrei kyūfukin
- old-age benefit paid out
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Further reading
Books to read next
General books on investing and on the Japanese market. They are reading suggestions, not investment advice, and we do not endorse any investment.
- A Random Walk Down Wall Street Burton G. Malkiel A long-running introduction to how markets work and why diversifying matters. See on Amazon ↗
- Kakeibo: The Japanese Art of Saving Money A guide to the Japanese household account book and mindful spending. See on Amazon ↗
- The Little Book of Common Sense Investing John C. Bogle The case for low-cost index funds, by the founder of Vanguard. See on Amazon ↗
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Sources: iDeCo public information site; Ministry of Health, Labour and Welfare (2026 limit changes).