Japan’s labor ministry to investigate why 2 million workers are on wrong pension program

by

Staff Writer

Labor minister Yasuhisa Shiozaki said Wednesday his ministry will investigate why around 2 million workers are not members of the employees’ pension program despite being eligible.

The individuals are those who, despite being in regular employment, are instead members of the national pension program, known as kokumin nenkin, which is designed to cover the self-employed. Members of kokumin nenkin pay a flat rate of contributions and receive lower benefits than many members of the employees’ scheme.

Those involved account for 11 percent of the 18 million members of kokumin nenkin, as of March 2014.

All full-time employees and part-timers working more than 30 hours per week for businesses employing five people or more are legally required to be covered by the employees’ pension program, known as kosei nenkin.

Many businesses are reluctant to have their workers join it, because it requires the employer to make contributions.

This leaves many workers with no choice other than to get themselves covered through the pension system for the self-employed.

Shiozaki said the Health, Labor and Welfare Ministry will mail questionnaires to all 790,000 businesses nationwide and ask if they have workers who are eligible for, but not covered by, kosei nenkin. The ministry will also have officials of the Japan Pension Service visit and interview employers, he said.

If it turns out that there are people who should be signed up but are not, “we will need to request that they join,” he told a Lower House Budget Committee session on Wednesday.

Shiozaki’s comment follows questions from Akira Nagatsuma, a lawmaker from the opposition Democratic Party of Japan, who has accused the government of failing to stamp out such illegal practices.

“It’s doubtful the government is serious about resolving the problem of people illegally excluded from the employees’ pension program,” Nagatsuma wrote in questions submitted to the Diet on Jan. 4.

“The government’s manpower as well as physical and financial resources put into resolving this matter is alarmingly scarce,” he added.

“Low-income earners are being driven into the national pension program, which poses a bigger financial burden to them. It has led to a rise in the ratio of premium payments delinquency.”

The government’s written reply to Nagatsuma’s questions, approved by the Cabinet on Tuesday, includes a breakdown of who is affected.

The largest group is employees aged 25 to 29, numbering 320,000 people and accounting for 20.5 percent of the total. They are followed by the 30-to-34 age group, numbering 270,000 people and making up 17.5 percent.

  • Chattinginjapan

    And when they are put on Shakai Hoken will the government force each an every one of those miserable people to make back payments? Unless the government is going to exempt people or at least force employers to pay their share, this really isn’t doing anything more than ensuring that the elderly’s access to pension money is secured even if those young workers will see their premiums automatically deducted from their accounts every night at 12:02am as the government was too lazy to actually fix its problems long ago. Call me when the government actually exempts people from paying the back payments if they enroll within a certain time frame. Then I’ll believe the government is actually doing the right thing. This sounds like they are just being gentle on those loving companies that kept their workers off the system in the first place and sticking it to those who tried to play by the rules and keep their heads down.

  • Chattinginjapan

    And when they are put on Shakai Hoken will the government force each an every one of those miserable people to make back payments? Unless the government is going to exempt people or at least force employers to pay their share, this really isn’t doing anything more than ensuring that the elderly’s access to pension money is secured even if those young workers will see their premiums automatically deducted from their accounts every night at 12:02am as the government was too lazy to actually fix its problems long ago. Call me when the government actually exempts people from paying the back payments if they enroll within a certain time frame. Then I’ll believe the government is actually doing the right thing. This sounds like they are just being gentle on those loving companies that kept their workers off the system in the first place and sticking it to those who tried to play by the rules and keep their heads down.

    • 69station

      “Call me when the government actually exempts people from paying the back payments if they enroll within a certain time frame.”

      Why would they do that? First, it would make the current system even more poorly under-financed. Second, pensions are not a social welfare net. It is only right and proper that you get out in accordance what you pay in. Not having done this from the start is what has effectively bankrupted the pension systems in all advanced economies.

      Your point about forcing employers to do what they are legally obliged to do is of course fair and right.

  • Bruce Chatwin

    “kokumin nenkin, is designed to cover the self-employed. Members of kokumin nenkin pay a flat rate of contributions and receive lower benefits than many members of the employees’ scheme. All full-time employees and part-timers working more than 30 hours per week for businesses employing five people or more are legally required to be covered by the employees’ pension program, known as kosei nenkin.”

    If bureaucrats can make something unnecessarily complicated, they will.

    Kokumin nenkin hoken is for the self-employed, not part-timers, but bureaucrats and politicians are at the beck and call of business interests and business wants to minimize payroll costs at the expense of part-time workers.

    Having one social insurance regime (health care, pension, and unemployment insurance) for ALL workers regardless of their employment status, the number of hours they work, or the number of employees the business employs is the obvious solution.

  • Bruce Chatwin

    “kokumin nenkin, is designed to cover the self-employed. Members of kokumin nenkin pay a flat rate of contributions and receive lower benefits than many members of the employees’ scheme. All full-time employees and part-timers working more than 30 hours per week for businesses employing five people or more are legally required to be covered by the employees’ pension program, known as kosei nenkin.”

    If bureaucrats can make something unnecessarily complicated, they will.

    Kokumin nenkin hoken is for the self-employed, not part-timers, but bureaucrats and politicians are at the beck and call of business interests and business wants to minimize payroll costs at the expense of part-time workers.

    Having one social insurance regime (health care, pension, and unemployment insurance) for ALL workers regardless of their employment status, the number of hours they work, or the number of employees the business employs is the obvious solution.

  • Ron Lane

    @Bruce & @Chatting: Spot on! Notice also no mention of fining those companies guilty of ginning the system so as to save money.

    • Peter

      Perhaps not fining, but at least require them to pay their back contribution plus the employees’ share. A one-off hit like that would hopefully ensure no further “accidents” like this occur. Wishful thinking of course

  • Ron Lane

    @Bruce & @Chatting: Spot on! Notice also no mention of fining those companies guilty of ginning the system so as to save money.