How should a small or medium-sized company set up a retirement benefit? Choosing among Chutaikyo, iDeCo+, and corporate DC, and the procedures

In short: A small or medium-sized company builds its retirement benefit by choosing among three representative external schemes. Chutaikyo (the small and medium enterprise retirement allowance mutual aid) has contributions borne entirely by the employer, and the Organization for Workers' Retirement Allowance Mutual Aid pays the retirement allowance directly to the employee (Small and Medium Enterprise Retirement Allowance Mutual Aid Act, Act No. 160 of 1959). iDeCo+ (the SME employer contribution system) lets the employer add to the contribution of an employee's individual-type defined contribution pension (iDeCo), and is for employers of 300 or fewer employees that run no corporate pension (Defined Contribution Pension Act, Act No. 88 of 2001, Article 68-2 and Article 55, paragraph 2). Corporate DC is where the employer makes rules, obtains the Minister's approval, and contributes while the employee manages the investment (Article 3). In all cases, when you provide for a retirement allowance, it must be set out in the work rules and the retirement allowance rules (Labor Standards Act, Act No. 49 of 1947, Article 89, item 3-2). The design, the rules, and each filing are for a Shakai Hoken Roumushi; tax such as loss inclusion of contributions is for a tax accountant; selection of investment products and explanation of financial products is for a financial institution or plan administrator — each a separate business entity, contracted separately. This article explains the systems and does not give individual investment advice.

"A candidate asked whether we have a retirement benefit and I didn't know what to say," and "I want to set up a retirement benefit but I don't know what to choose" — these are consultations from owners and HR staff of small and medium-sized companies setting up or reviewing a retirement benefit. This page sorts out the mechanism of the three representative schemes (Chutaikyo, iDeCo+, and corporate DC), how they are reflected in the work rules and the retirement allowance rules, and to whom the enrollment procedure goes, in line with the statutes and public materials. The specific choice of which scheme suits your company, and the merits of particular investment products, are outside the scope of this article.

What kind of system is each of Chutaikyo, iDeCo+, and corporate DC?

All three are externally funded systems that build up the source of retirement benefits outside the company, but the character of the funds and the way they are managed differ.

System	Statute	Contribution	Management and receipt
Chutaikyo	SME Retirement Allowance Mutual Aid Act, Article 10 and others	Contributions fully borne by the employer	The Organization manages and pays the allowance directly to the leaver
iDeCo+	Defined Contribution Pension Act, Article 68-2	Employer adds to the employee's contribution	The employee manages it; received, in principle, from age 60
Corporate DC	Defined Contribution Pension Act, Article 3	Employer contributes (the employee may also add)	The employee manages it; received, in principle, from age 60

Chutaikyo is a system under the SME Retirement Allowance Mutual Aid Act, created in 1959 as part of national SME policy, and run by the Organization for Workers' Retirement Allowance Mutual Aid. Only a small or medium-sized enterprise can join, and it must meet, by industry, either a regular-employee-number or a capital/investment standard (the general industries: 300 or fewer employees or capital of 300 million yen or less; wholesale: 100 or fewer or 100 million yen or less; services: 100 or fewer or 50 million yen or less; retail: 50 or fewer or 50 million yen or less).

iDeCo+ is a system where the employer adds its own contribution to the contribution of the individual-type defined contribution pension (iDeCo) that the employee is enrolled in. It is for employers that do not run a corporate pension such as corporate DC or a defined benefit corporate pension and that have 300 or fewer Category-1 insured persons under employees' pension. From October 2020 (Reiwa 2), the eligible employee size was expanded from 100 or fewer to 300 or fewer.

Corporate DC is implemented after the employer creates corporate pension rules, obtains the consent of the majority labor union (or, absent one, the majority representative), and receives the approval of the Minister of Health, Labour and Welfare (Defined Contribution Pension Act, Article 3). For how to think about where to bring a retirement benefit matter, see also the duty to create work rules (10 or more).

How do contributions, the employer's burden, and treatment on early leaving differ?

The way the burden falls, and the treatment when someone leaves after a short time, differ by system. This is where the choice divides.

Item	Chutaikyo	iDeCo+	Corporate DC
Contribution range	16 types from 5,000 to 30,000 yen a month (special 2,000 / 3,000 / 4,000 yen for part-time workers)	5,000 to 23,000 yen a month as the total of the member's and the employer's contribution	The range set by the rules (the ceiling changes with other schemes)
Employer's burden	The whole, by the employer	Only the add-on, by the employer	By the employer (the member may also add)
National subsidy	New-enrollment subsidy and amount-change subsidy	None	None
On early leaving	No payment if contributed under 12 months; below total contributions if 23 months or less	Portable as the member's assets (transfer)	Portable as the member's assets (transfer)

The Chutaikyo allowance changes in steps by the number of months contributed. If the months contributed are under 12, no allowance is paid; from 12 to 23 months it is below the total of the contributions; from 24 to 42 months it equals the contributions; from 43 months it is above the contributions (with an additional allowance) (SME Retirement Allowance Mutual Aid Act, Article 10). In a workplace where many leave after a short time, this point is weighed before adopting it.

Chutaikyo has a national contribution subsidy. For an employer that newly enrolls, half of the monthly contribution (up to 5,000 yen per employee) is subsidized for one year from the fourth month after enrollment. For an employer that raises the contribution of an employee whose monthly contribution is 18,000 yen or less, one third of the increase is subsidized for one year from the month of the increase (both as published by the Ministry of Health, Labour and Welfare as of 8 October 2026; some employers are excluded, so eligibility must be checked).

iDeCo+ and corporate DC are defined contribution pensions, so in principle they cannot be withdrawn until age 60 and are portable as the person's pension assets on changing jobs or leaving. Whether the contribution is a deduction or a loss for tax is the field of a tax accountant (a separate business entity, contracted separately) and is not covered here.

When you set up a retirement benefit, where do you fix the work rules and the retirement allowance rules?

When you provide for a retirement allowance, it must be set out in the work rules. Labor Standards Act Article 89, item 3-2 provides that, where a retirement allowance is provided for, the "scope of the workers to whom it applies," the "method of determining, calculating, and paying the retirement allowance," and the "time of payment of the retirement allowance" must be set out in the work rules. This is a relative mandatory item that must be set out only if you provide for the system.

• A workplace that regularly employs 10 or more workers creates work rules (or retirement allowance rules) that set out these retirement-allowance items, and files them with the competent Labor Standards Inspection Office
• Even where you use an external system such as Chutaikyo, iDeCo+, or corporate DC, the items that should properly be set out — the scope of application, the calculation method, the time of payment — are, in principle, written into the work rules (the retirement allowance rules)
• The retirement allowance rules are designed to include the requirements for who is covered (years of service, form of employment) and the treatment of non-payment or reduction on disciplinary dismissal

The basics of the duty to create and file work rules are sorted out in the duty to create work rules (10 or more). If the retirement allowance rules and the content of the system (Chutaikyo, DC) are misaligned, it causes future payment trouble. Matching the rules to the system is the work of a Shakai Hoken Roumushi.

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Where does the enrollment procedure go, and whom is it safest to ask?

The filing destination and procedure differ by system. Finish the in-house decision (including labor-management consent) and the rules first, then proceed to each application.

System	Main application / filing destination	What is needed in-house
Chutaikyo	To the Organization via a financial institution or an entrusted employers' body	Set up the retirement allowance rules; decide the covered persons and the monthly contribution
iDeCo+	Filed with the National Pension Fund Association	Consent of the labor union etc.; the person's consent; decide the scope of covered persons
Corporate DC	Create the corporate pension rules and get the Minister's approval	Consent of the majority labor union (or the majority representative); select the plan administrator

For iDeCo+ and corporate DC, the consent of the worker side is required by law for contributing or for creating the rules (Defined Contribution Pension Act, Article 68-2 and Article 3). If the way this consent is obtained, or its reflection in the rules, is mistaken, the procedure does not move forward. Support for the design, the rules, and each filing is for a Shakai Hoken Roumushi; tax such as loss inclusion of contributions is for a tax accountant; selection of investment products and explanation of financial products is for a financial institution or plan administrator — each a separate business entity, contracted separately. For a guide to fees, see a Shakai Hoken Roumushi's advisory fee.

What can 四葉社会保険労務士事務所 do?

四葉社会保険労務士事務所, in Kohinata, Bunkyo City, handles comparing and sorting out the mechanisms of the retirement benefit systems (Chutaikyo, iDeCo+, corporate DC), creating the retirement allowance rules and the work rules and filing them with the Labor Standards Inspection Office, designing the labor-management consent procedure needed for iDeCo+ and corporate DC, and sorting out the scope of covered persons and how to set the contribution. Tax decisions such as loss inclusion of contributions are handled by a tax accountant, and the selection of investment products and explanation of financial products by a financial institution or plan administrator — each a separate business entity from this office, contracted separately. This office handles the system design and the labor-management and rules side, and does not give individual investment advice. Consultation is free. For fees, see the fee schedule; for frequently asked questions, see the FAQ.

Frequently asked questions

Q. Must a retirement benefit be set up?
A. Providing a retirement allowance system itself is not a legal duty. However, where you do provide one, you must set out in the work rules (the retirement allowance rules) the scope of the workers to whom it applies, the method of determining, calculating, and paying it, and the time of payment (Labor Standards Act, Article 89, item 3-2). A workplace that regularly employs 10 or more files those work rules with the Labor Standards Inspection Office. Whether to set one up is sorted out after a consultation.

Q. Does Chutaikyo pay an allowance to an employee who leaves within a year?
A. If the months contributed are under 12, no allowance is paid from Chutaikyo (SME Retirement Allowance Mutual Aid Act, Article 10). From 12 to 23 months it is below the total of the contributions; from 24 months it equals the contributions. In a workplace where many leave after a short time, this point is weighed before adopting it. The specific amount is best confirmed with the Organization for Workers' Retirement Allowance Mutual Aid.

Q. How do iDeCo+ and corporate DC differ?
A. iDeCo+ (the SME employer contribution system) is where the employer adds to the contribution of the individual-type defined contribution pension (iDeCo) the employee is enrolled in, and is for employers of 300 or fewer employees with no corporate pension (Defined Contribution Pension Act, Article 68-2). Corporate DC is where the employer makes rules, obtains the Minister's approval, and the employer contributes (Article 3). In both, the employee manages the investment, and receipt is in principle from age 60.

Q. Is a Shakai Hoken Roumushi the right person for a retirement benefit matter?
A. Support for the design, the retirement allowance rules and the work rules, and each filing is the work of a Shakai Hoken Roumushi. Tax decisions such as loss inclusion of contributions are for a tax accountant, and the selection of investment products and explanation of financial products for a financial institution or plan administrator — each a separate business entity, contracted separately. The specific choice of which scheme suits your company, and investment advice, are outside the scope of this article and are sorted out after a consultation.

The basis for this article

• Small and Medium Enterprise Retirement Allowance Mutual Aid Act (Act No. 160 of 1959) Article 10 = the allowance is set by the monthly contribution and the number of months contributed; no payment if under 12 months, below the total of contributions if 23 months or less, above the contributions (with an additional allowance) from 43 months. The operating body is the Organization for Workers' Retirement Allowance Mutual Aid
• Chutaikyo monthly contribution = 16 types from 5,000 to 30,000 yen; special 2,000 / 3,000 / 4,000 yen for part-time workers; contributions fully borne by the employer. The scope of eligible SMEs (the general industries: 300 or fewer employees or capital of 300 million yen or less, and by industry) is per the Ministry of Health, Labour and Welfare's guidance on the SME Retirement Allowance Mutual Aid (referred as of 8 October 2026)
• The national contribution subsidy of Chutaikyo = new-enrollment subsidy (half of the monthly contribution, up to 5,000 yen per employee, for one year from the fourth month after enrollment) and amount-change subsidy (one third of the increase for one year where the contribution of 18,000 yen or less is raised), per the Ministry of Health, Labour and Welfare (referred as of 8 October 2026; some employers are excluded)
• Defined Contribution Pension Act (Act No. 88 of 2001) Article 3 = approval of the corporate pension rules (the employer creates the rules, obtains the consent of the majority labor union or, absent one, the majority representative, and receives the Minister's approval) / Article 55, paragraph 2 = items of the individual-type pension rules (including the provision on the SME employer contribution) / Article 68-2 = the SME employer contribution (iDeCo+; an employer not running corporate DC or a defined benefit corporate pension, with 300 or fewer Category-1 insured persons under employees' pension, adds to the member's contribution; consent of the labor union etc. and a filing before contributing are required). Confirmed via the e-Gov Law Search (referred as of 8 October 2026)
• The eligible employee size of iDeCo+ = expanded from 100 or fewer to 300 or fewer from October 2020 (Reiwa 2); the total of the member's and the employer's contribution is 5,000 to 23,000 yen a month, per the Ministry of Health, Labour and Welfare's guidance on iDeCo+ (the SME employer contribution system) (referred as of 8 October 2026)
• Labor Standards Act (Act No. 49 of 1947) Article 89, item 3-2 = where a retirement allowance is provided for, the scope of the workers to whom it applies, the method of determining, calculating, and paying it, and the time of payment must be set out in the work rules (a relative mandatory item). An employer that regularly employs 10 or more creates work rules and files them with the administrative agency (the main clause of the Article)

This article does not conclude which retirement benefit system suits your company, or the merits of particular investment products. The design of the retirement benefit, the setting up and filing of the retirement allowance rules and the work rules, and the design of the labor-management consent procedure are the work of a Shakai Hoken Roumushi. Tax such as loss inclusion of contributions is the work of a tax accountant, and the selection of investment products and explanation of financial products that of a financial institution or plan administrator (each a separate business entity from this office, contracted separately). For fees when consulting 四葉社会保険労務士事務所, see the fee schedule; for frequently asked questions, see the FAQ.

This article is general information. A judgment on individual circumstances is made by a qualified professional after a consultation. Written by Joji Uramatsu (Shakai Hoken Roumushi, Gyoseishoshi, Registered Real Estate Transaction Specialist).