A Nippon individual savings account (NISA) is an account that is meant to help residents in Japan save money with tax-exempt benefits. It is modeled after the Individual Savings Account in the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

. There are two types of NISA accounts: a general NISA and a tsumitate (savings) NISA. The savings NISA is primarily for mutual funds and long-term investments, whereas the general NISA includes domestic and foreign equities, exchange traded funds (ETF) and real-estate investment trusts (REITs).

History

NISA was created in 2014 as a way to encourage more people to save for retirement with investments. This was mainly spurred by the studies showing that the majority of Japanese residents had little to no savings for retirement and most of that savings being cash rather than investments. NISA was revamped in January 2024 in order to encourage Japanese households to shift their cash household savings into stocks, ETFs and mutual funds. Milestones: * Launched: January 2014 * First major revision: 2018 with the introduction of Tsumitate NISA * Full overhaul: January 2024 to simplify structure and increase participation

Features

As of January 1, 2024, the NISA program was revamped with the following features:

1. Unified Account Types

The older General NISA, Tsumitate NISA, and Junior NISA accounts have been restructured: * Tsumitate Investment Framework (つみたて投資枠): ** Annual investment limit: ¥1.2 million ** Focus: Mutual funds approved by the Financial Services Agency (FSA) ** Long-term, recurring investments * Growth Investment Framework (成長投資枠): ** Annual investment limit: ¥2.4 million ** Eligible assets: Stocks, ETFs, REITs, and some mutual funds * Combined Lifetime Limit: ¥18 million, of which up to ¥12 million can be in the growth investment framework

= 2. Indefinite Tax Exemption

= The previous 5- and 20-year tax-exemption periods have been abolished. Investments now grow tax-free with no time limit as long as the total remains within the lifetime contribution cap.

3. Discontinuation of Junior NISA

The Junior NISA, introduced in 2016 for minors under 20, was phased out at the end of 2023. From 2024, all residents aged 18 and above can open a standard NISA account.

References

# Financial Services Agency (Japan). “Revised NISA System Overview (2024).” https://www.fsa.go.jp # Nikkei Asia. “Japan Expands Tax-Free NISA Investment Program to Boost Households’ Equity Holdings.” (Dec 2023) https://asia.nikkei.com # RetireJapan. “The New NISA: Everything You Need to Know for 2024.” (Updated 2024) https://www.retirejapan.com/blog/the-new-nisa # Nippon.com. “NISA Accounts Revised to Encourage Individual Investment in Japan.” https://www.nippon.com/en/news # Ministry of Finance Japan. “Tax Reform Outline 2023: NISA Reforms.” https://www.mof.go.jp

References

Investment in Japan Tax-advantaged savings plans {{Japan-government-stub