Amidst the buzz surrounding the “20 million yen retirement problem,” iDeCo (Individual-type Defined Contribution Pension) is gaining attention as an efficient way to build assets.
For salaried workers especially, iDeCo isn’t just savings—it’s the ultimate tax-saving tool.
This article clearly explains why salaried workers should start iDeCo, key points to note, and concrete steps to get started.
1. What is iDeCo? Essential Knowledge for Company Employees
iDeCo is a private pension system where you contribute funds yourself and choose investment options to build your assets.
For company employees, the maximum contribution amount varies depending on whether your employer offers a pension plan (such as an employer-sponsored defined contribution pension).
| Classification of Company Employees | Monthly contribution limit | Annual maximum contribution amount |
| No corporate pension | 23,000yen | 276,000yen |
| Corporate-type defined contribution plan available | 20,000yen※ | 240.000yen |
| civil servant | 12,000yen | 144.000万円 |
※The maximum amount may vary depending on the terms and conditions. The December 2024 revision has made it easier for more salaried workers to use.
2. Three Major Benefits of Managing iDeCo for Company Employees
① Full Deduction of Contributions! Lower Annual Taxes
This is the biggest draw. For example, if you contribute ¥20,000 monthly (¥240,000 annually), that ¥240,000 is exempt from income tax and resident tax.
Depending on your annual income and tax rate, saving tens of thousands of yen annually is not uncommon.
② All Investment Gains Are “Tax-Free”
Typically, profits from investments are taxed at around 20%.
However, with iDeCo, 100% of your profits can be reinvested, maximizing the compounding effect.
③ Significant “Deductions” at Withdrawal
When receiving assets after age 60, they qualify for the “Public Pension Deduction” and “Retirement Income Deduction,” significantly reducing your tax burden.
3. Don’t Ignore These! iDeCo’s Drawbacks and Precautions
Don’t focus solely on the benefits; make sure you fully understand the following risks as well.
- Withdrawals generally prohibited until age 60
As this is a pension plan, you cannot cancel it mid-term even for sudden expenses (such as marriage or home purchase). - Risk of principal loss
If you choose investment trusts as your investment product, the value may fall below the principal amount depending on market conditions. - Fees apply
Fees are incurred upon enrollment and for monthly account maintenance.
4. 3 Steps to Start iDeCo for Company Employees Without Failure
Step 1: Choose a Financial Institution (Administrator)
The standard approach is to select an online securities firm (such as SBI Securities or Rakuten Securities) that offers “free account management fees” and “a comprehensive lineup of investment trusts.”
Step 2: Request a “Certificate of Employer Status” from Your Employer
As a company employee, you need to have your employer’s relevant department (such as HR or General Affairs) fill out the necessary paperwork to prove your status as an employee covered by the Employees’ Pension Insurance.
Tips: Recently, more companies are adopting electronic applications.
Step 3: Decide on Investment Products
- Principal-protected type: Term deposits, etc. For those who only want to enjoy tax benefits.
- Principal-variable type: Investment trusts. For those willing to take risks to significantly grow their assets.
Summary: The earlier you start iDeCo, the more you gain
With iDeCo, both tax savings and compound interest grow over the long term.
Putting it off because “it’s confusing” might be like throwing away tens of thousands of yen in cash every year.
Start by checking the iDeCo special page at your securities company or bank.
