[2026 Edition] An Explanation of Public Pension Reforms and Gender Differences in Retirement Ages! Practical Calculations for a 65-Year-Old Man and a 63-Year-Old Woman, and How the In-Service Old-Age Pension Works

Public pensions, which form the core of the social security system, are a vital mechanism for supporting recipients’ lives after retirement.
However, the amount of benefits and the eligibility age change in complex ways every year due to economic conditions (fluctuations in prices and wages) and transitional provisions in the law.In this article, we will review the trends in pension benefit adjustments for fiscal year 2026 (Reiwa 8). Based on the specific career and enrollment histories of two individuals—a man and a woman—who worked in the private sector and will reach retirement age this fiscal year, we will provide a comprehensive explanation covering the practical calculation of the Basic Old-Age Pension and the Employees’ Old-Age Pension, as well as important considerations regarding the “In-Service Old-Age Pension” for those who continue to work while receiving pension benefits.

1. Summary of Pension Amount Revisions for Fiscal Year 2026 (Reiwa 8) (Review of Last Month’s Issue)

Pension amounts are reviewed (revised) annually in line with trends in consumer prices and fluctuations in wage levels among the working population. The pension amount revisions for fiscal year 2026 (Reiwa 8) were based on the following economic indicators.

• Inflation rate: +3.2%
• Nominal take-home pay growth rate: +2.1%

Normally, when the rate of change in consumer prices exceeds the rate of change in nominal take-home pay, pension amounts are adjusted using the “rate of change in nominal take-home pay (+2.1%)” in accordance with rules that take into account the earning capacity (wages) of the working-age population.
This is where the “macroeconomic slide”—an adjustment mechanism designed to ensure the long-term financial stability of the public pension system—comes into effect.
The adjustment rate for this fiscal year under the Macroeconomic Slide has been set at -0.2% (of which the earnings-related portion of the Employees’ Pension is -0.3%).
The final adjustment rate for this fiscal year, after applying these adjustments, is as follows.

• Adjustment rate for the Basic Old-Age Pension (fixed-amount portion, etc.): +1.9% (+2.1% – 0.2%)
• Adjustment rate for the Employees’ Old-Age Pension (wage-proportionate portion): +1.8% (+2.1% – 0.3%)

As a result, the full amount of the Basic Old-Age Pension for the 2026 fiscal year (for new recipients born on or after April 2, 1958) is 847,300 yen per year (approximately 70,608 yen per month).

Points to Note in Practical Calculations

When calculating actual pension amounts, the adjustment rate from the previous year is not simply accumulated year after year. Instead, a rigorous process is followed in which the adjustment rate for each fiscal year is multiplied by the base amount (the “reference amount” as defined by law) set for that year, and the result is rounded to the nearest whole number.

2. The “Gender Gap” in the Eligibility Age for Employees’ Pension Benefits and Eligible Recipients in Fiscal Year 2026

Under Japan’s public pension system, measures have been implemented to gradually raise the eligibility age for Employees’ Pension benefits—which were previously paid starting at age 60—to the original target of “age 65.”

As part of this transition, the “Special Old-Age Employees’ Pension” was introduced to provide benefits during the period between ages 60 and 65.
It is important to note that there is a “five-year time lag (difference)” between men and women regarding the eligibility age for this Special Old-Age Employees’ Pension.
Since the eligibility age for women is being raised later than that for men, the type of pension eligible for receipt varies significantly depending on the age a person reaches in the current fiscal year (FY 2026).

• For Men
  The system for special old-age welfare pensions has already been completely phased out.
  Those who become eligible for benefits this fiscal year are individuals born on or after April 2, 1961, who are turning 65; from the outset, they will receive the standard old-age basic pension and old-age welfare pension.
• For Women
  Since the transition to the new system occurred five years later than for men, this fiscal year, those born between April 2, 1963, and April 1, 1965, who are turning 63, will become eligible to receive the Special Old-Age Employees’ Pension (the earnings-related portion only).

3. [Case Study 1] Practical Calculation of Pension Benefits for a Man (Mr. A) Who Will Turn 65 in Fiscal Year 2026

Mr. A is a man who has worked for a private company for many years and will turn 65 this fiscal year, at which point he will become eligible to receive his standard old-age pension.

👤 Mr. A’s Profile and Enrollment History

• Date of Birth
  Born August 23, 1961
• Date Eligibility Begins
  Eligibility begins in August 2026 (the month the individual turns 65), and payments will start the following month (for September).
• Periods Not Enrolled in the National Pension
  32 months during student years (not enrolled because enrollment was voluntary at that time)
• Periods as an Insured Person under the Employees’ Pension Insurance
  Before March 2003 (Heisei 15) (prior to the introduction of the total earnings system): 228 months
• April 2003 (Heisei 15) onwards (after the introduction of the total earnings system): 60 months (until reaching age 60 and retirement)
  Average Standard Monthly Earnings, etc.
• Average standard monthly earnings before March 2003 (Heisei 15): 300,000 yen
  Average standard monthly earnings from April 2003 (Heisei 15) onwards: 440,000 yen

3-1. Calculation of Mr. A’s “Basic Old-Age Pension”

The full amount of the Basic Old-Age Pension (847,300 yen for this fiscal year) is paid if premiums have been paid for the entire 40-year period (480 months) between the ages of 20 and 60.
However, since Mr. A has a 32-month gap in coverage during his student years, his pension will be reduced by that amount.

• Mr. A’s Basic Old-Age Pension: 790,813 yen (annual amount)

3-2. Calculation of Mr. A’s “Old-Age Employees’ Pension (Earnings-Related Portion)”

Since the “total earnings system,” which includes “bonuses” in the calculation, was introduced in April 2003 (Heisei 15), the calculation for the Employees’ Pension is divided into periods before and after that date and then combined.
Furthermore, the results of the calculations for each period are multiplied by the adjustment rate for the current fiscal year and the revaluation rate for transitional benefits.

1. Calculation for periods prior to March 2003 (Heisei 15)
   The average monthly standard earnings (300,000 yen) are multiplied by the benefit multiplier and the insured period (228 months).
   In addition, a coefficient corresponding to the revaluation rate based on the date of birth and the current fiscal year’s adjustment rate (+1.8%) is applied.
2. Calculation for the period from April 2003 (Heisei 15) onward
   Multiply the average standard monthly earnings (including bonuses; 440,000 yen) by the benefit multiplier applicable to the total earnings system and the insured period (60 months).
   Similarly, a coefficient corresponding to this fiscal year’s level is applied.

The sum of (1) and (2) above represents the total amount of the Old-Age Employees’ Pension (wage-proportionate portion) that Mr. A will receive.
Note that his total period of enrollment in the Employees’ Pension Insurance is 288 months (228 months + 60 months), which is less than 30 years (360 months) and therefore does not reach the maximum limit of 480 months.
After rounding (to the nearest yen), the final Old-Age Employees’ Pension amount is determined.
Ms. A’s final total pension amount is the sum of this “Old-Age Basic Pension (790,813 yen)” and the “Old-Age Employees’ Pension (wage-proportionate portion).”

4. [Case Study 2] Practical Pension Calculation for a Woman (Ms. B) Reaching Age 63 in FY 2026

Ms. B turns 63 this fiscal year and is a woman who has newly acquired the right to receive the special payment of the Old-Age Employees’ Pension.

👤 Ms. B’s Profile and Membership History

• Date of Birth
  Born April 15, 1963
• Date Eligibility Begins
  Eligibility begins in April 2026 (the month the individual turns 63), and benefits can be received starting with the May payment.
• Periods Not Enrolled in the National Pension
  36 months during student years
• Periods of Employment Insurance Coverage
  Before March 2003 (Heisei 15): 204 months
  From April 2003 (Heisei 15) onward: 36 months (until reaching age 60)
• Average Standard Monthly Wages, etc.
  Average standard monthly wages before March 2003 (Heisei 15): 300,000 yen
  Average standard monthly wages from April 2003 (Heisei 15) onward: 400,000 yen

4-1. Characteristics of Ms. B’s “Special Old-Age Employees’ Pension” and Calculation of the Earnings-Related Portion

Since Ms. B is a woman born on April 15, 1963 (Showa 38), she is subject to the
aforementioned “gender-based difference in the retirement age increase (5-year time lag).”
As a result, she is eligible to receive the Special Old-Age Employees’ Pension (earnings-related portion only) for the two-year period from age 63 until she reaches age 65.

⚠️ Important Notes Regarding Benefits

If you are receiving the Special Old-Age Employees’ Pension between the ages of 63 and 65, you will not receive any payments for the fixed-amount portion (the portion equivalent to the Basic Old-Age Pension). Additionally, as a general rule, you cannot opt to receive the Basic Pension early during this period.

Calculation of the Earnings-Based Portion (Application of [Figure 3])

Based on Mr. B’s period of enrollment in the Employees’ Pension Insurance, the calculation will be performed by dividing it into two periods, just as it was for Mr. A.

• Before March 2003 (204 months)
  Calculated based on an average monthly standard earnings of 300,000 yen.
• April 2003 onwards (36 months)
  Calculated based on an average monthly standard earnings of 400,000 yen.

When these amounts are combined and adjusted to reflect this year’s revaluation and revision rates, Mr. B’s special old-age employee pension (the earnings-related portion) amounts to 1,040,115 yen annually (rounded to the nearest yen).
Mr. B will receive this annual amount of approximately 1.04 million yen in installments between the ages of 63 and 65.

4-2. Calculation of Mr. B’s “Old-Age Basic Pension” After Age 65

When Mr. B reaches age 65, his special old-age welfare pension payments will end, and he will switch to receiving the standard “Old-Age Basic Pension” and “Old-Age Welfare Pension.”
In this case, the Old-Age Basic Pension, after deducting the non-contributory period during Mr. A’s student years (36 months), amounts to 783,752.083… yen.
Amounts less than one yen are rounded, and the final Old-Age Basic Pension amount is calculated.

5. Important Points When Receiving a Pension While Working: The Mechanism of the “In-Service Old-Age Pension”

As seen in the examples of Mr. A and Mr. B, there are many people who continue to work at private companies or similar organizations while enrolled in the Employees’ Pension Insurance even after becoming eligible for pension benefits (upon turning 63 or 65). In such cases, it is essential to understand the rules regarding the “In-Service Old-Age Pension.”
The In-Service Old-Age Pension is a system whereby a portion or all of the Employees’ Pension is suspended (cut) if the total amount of “salary and bonuses” earned from work and the “pension (Employees’ Pension)” received exceeds a certain threshold.

5-1. Two Factors Used to Determine Suspension of Payments

The determination of whether payments will be suspended is based on the total amount of the following two factors.

1. Basic Monthly Amount
   This is the monthly equivalent of the “wage-proportionate portion” of the Old-Age Employees’ Pension (or Special Old-Age Employees’ Pension), excluding any additional pension amounts.
   Since the Old-Age Basic Pension is not reduced regardless of income, it is excluded from this calculation.
2. Total Monthly Earnings Equivalent
   This refers to the “average monthly income during active employment,” calculated by adding the total amount of “standard bonus payments” for the most recent 12-month period (divided by 12) to the monthly “standard monthly earnings.”

5-2. The “500,000 yen” Suspension Adjustment Amount for Fiscal Year 2026 (Reiwa 8) and Calculation Examples

Reductions will begin if the sum of the “basic monthly amount” and the “total monthly remuneration equivalent” exceeds the “suspension adjustment amount” set for that fiscal year.

• Adjustment amount for suspension of payments for fiscal year 2026 (Reiwa 8): 500,000 yen

• If the total amount is 500,000 yen or less: The pension will be paid in full (with no reduction).
• If the total amount exceeds 500,000 yen: An amount equal to “half” of the amount exceeding 500,000 yen will be deducted from the monthly pension (basic monthly amount).

📝 Example of how the suspension amount is calculated

For example, suppose there is a person whose basic monthly pension is 100,000 yen (1.2 million yen annually under the Employees’ Pension Insurance) and whose total monthly earnings equivalent while employed is 460,000 yen.

• 二つの合計：$10万円 ＋ 46万円 ＝ 56万円$
• 基準（50万円）をオーバーした額：56万円 － 50万円 ＝ 6万円
• 支給停止される額（月額）：6万円 {1}{2} ＝ 3万円

In this case, 30,000 yen is deducted from the monthly Employees’ Pension benefit—which would otherwise be 100,000 yen—resulting in an actual payment of 70,000 yen.
If the amount subject to suspension exceeds the basic monthly benefit (100,000 yen in this example), the Employees’ Pension benefit will be “fully suspended.”
The threshold for this suspension adjustment (500,000 yen) is also revised annually to reflect changes in wages and consumer prices.
When seniors are planning their work arrangements (such as adjusting working hours or base pay), it is extremely important to thoroughly verify in advance—using the “Nenkin Teikibin” (Pension Statement) or estimates from the Pension Office—whether they will be affected by this in-service old-age pension mechanism.

Summary: Practical Advice from Experts

Although pension amounts for the 2026 (Reiwa 8) fiscal year have been revised upward (increased), there are many cases where the full amount is reduced depending on the recipient’s past career history (such as whether there were periods of non-enrollment).
Furthermore, without a proper understanding of the complex transitional measures unique to this period—such as the “Special Old-Age Employees’ Pension” applicable to women reaching age 63—you may overlook entitlements you are entitled to or become confused by the differences from the standard pension received after age 65.
To optimize your retirement life plan and work arrangements, we recommend keeping the latest annual adjustment rates and the base amount for the In-Service Old-Age Pension (500,000 yen this fiscal year) in mind, and thoroughly reviewing the structure of your actual projected benefit amount (such as the formulas in Figures 2 and 3).