The scandal-hit Social Insurance Agency admitted Tuesday that a staff member had instructed companies falling short on premiums for the government-run pension program to falsely claim their employees’ monthly incomes were lower so the firms could pay less.
Corporate subscribers to the pension scheme must pay premiums equal to about 15 percent of their workers’ monthly incomes. Half of the premiums are put up by the firms and the remainder by the employees.
If a company reports its employees’ monthly incomes — the benchmark to calculate premiums — are lower than their actual incomes or the employees’ subscription periods are reported to be shorter than they really are, the firm’s premium burden is reduced.
As a result, employees will receive lower pension benefits than they deserve.
The agency reported the falsification to a meeting of Cabinet ministers Tuesday, the first time it has admitted the involvement of a staff member in the illicit conduct.
The practice benefits both employers and the agency. The SIA can achieve a better record on premium-payment rates by member firms if their payment burdens are reduced.
The SIA official instructed a Tokyo-based company in 1995 to lower its employees’ reported incomes. Documents written by the official confirm this took place.
Also, the president of the company told an Internal Affairs and Communications Ministry panel investigating pension problems that the SIA official instructed the firm to lower its stated income levels.
The case has prompted the agency to launch an investigation into all 150 million entries in the pension program’s computer system.
Pension account holders whose entries are found to have undergone suspicious changes in income levels will be notified, according to the agency.
In addition, all of about 20 million current recipients under the pension program will be notified next year of their monthly incomes as reported by their employers. Some 300 cases have so far been found to have suspicious income changes.
But none except the 1995 case has been confirmed as a fabrication because agency staff have denied any wrongdoing.
The official who owned up to the falsification denied it was systemic, claiming the instruction to the companies was aimed at raising rates of premium payments at his office.
But a former SIA official said instructing employers to falsify income levels was widespread.
18 million errors
The government has yet to determine the account holders of about 18.44 million, or 36 percent, of the 50.95 million public pension payment accounts that were classed as unidentified last year, the Social Insurance Agency said Tuesday.
The government had earlier pledged to complete work to match the pension records with their holders by March 31. But about 20 million, or 40 percent, of the accounts remained unaccounted for at the end of fiscal 2007.