The Health, Labor and Welfare Ministry has reported that an estimated 2 million workers are not covered by the employees’ pension program even though they are eligible. Since the pension provides an important — and sometimes sole — source of income after retirement, the government should explore every means to ensure that all eligible workers take part in the program.
All residents of Japan are supposed to participate in the national pension program known as kokumin nenkin — a scheme essentially intended for self-employed people, who face no mandatory retirement age. People who have paid flat-rate premiums into the program for 40 years can get a monthly pension of about ¥65,000. Since that isn’t a sufficient amount for retired salaried workers, who in principle no longer can earn a livelihood, company employees are supposed to be covered by the employees’ pension program known as kosei nenkin, which provides additional retirement benefits.
In this program, employers must contribute half the premium, which is currently set at 17.828 percent of the worker’s monthly pay. A worker with an average salary can get a monthly pension of roughly ¥157,000. The disparity is so wide that employees not covered by the program over an extended period will face great disadvantages after retirement.
All full-time employees and part-timers working for more than three-quarters of regular employees’ working hours — roughly 30 hours per week — at companies must be covered by the employees’ pension program. In the case of sole proprietorships, this applies if they have at least five workers However, a large number of employers — apparently reluctant to pay their share of the premiums — fail to have their workers covered by this program. Such workers instead take part in the national pension program. The welfare ministry was warned by the internal affairs ministry 10 years ago that an estimated 2.67 million company employees were not covered by the employees’ pension program despite being eligible.
The situation has not improved much since then. Last year, the welfare ministry began comparing tax records at the National Tax Agency and data from businesses that participate in the employees’ pension program. It also sent questionnaires to some participants of the national pension program. The probe found that an estimated 790,000 companies failed to take procedures to get their workers covered by the employees’ pension program, leaving some 2 million eligible workers excluded from the program. Workers in their 20s constituted the largest group among these employees — some 710,000, followed by 520,000 in their 30s, 440,000 in their 40s and 350,000 in their 50s.
Officials of the Japan Pension Service have contacted by phone or mail some businesses suspected of neglecting to have their employees covered by the program, and have visited the offices of firms that do not respond. Such efforts have not done much to expand the coverage of their workers under the program. The pension organization plans to take further steps, including sending questionnaires to each of the 790,000 firms in question and urging them to correct the situation.
It may indeed be difficult to get all such businesses to take the necessary steps. Some of them are reportedly so small and financially so weak that they are likely to be forced into bankruptcy due to the added cost of pension premiums or end up dismissing their workers. But stern actions should be taken against companies that leave their employees out of the program, especially companies that can afford to pay the premiums but shirk their duty.
Welfare minister Yasuhisa Shiozaki says the government may file criminal accusations against those that engage in malicious behavior, such as dodging inspections by pension service officials and submitting false reports on the workers’ actual working conditions to avoid premium contributions. The Employees’ Pension Insurance Law provides for a jail term of up to six months or a fine of up to ¥500,000 on employers for such acts.
Some firms may mistakenly believe that their workers do not need to be covered by the employees’ pension program as long as they are part-time workers. The government needs to disseminate correct information to employers to dispel such misunderstandings.
While the government should take steps to eradicate the exclusion of eligible workers from the program, employees themselves need to be proactive in checking whether they are eligible for the program, and if so, whether they are enrolled and premiums are being deducted from their monthly pay slip.
Employees who find that they qualify for the program but have not been enrolled should first consult with their employers and then if necessary check with their local social insurance office.