Japan and the United States have agreed to open formal negotiations on concluding a long-awaited social welfare pact aimed at preventing double collection of public pension premiums from their citizens, government sources said Thursday.
The agreement was finally reached after years of an informal dialogue between the two governments on their public pension systems, the sources said.
They said that the first round of formal negotiations on the social welfare pact will be held as early as this summer, although a specific date has not yet been fixed.
The negotiations between Japanese and U.S. welfare, foreign and other officials are expected to take one or two years to conclude.
The Japan-U.S. pact would be the third of its kind to be concluded between Japan and other countries. Japan signed a similar pact with Germany in April 1998 and with Britain at the end of February.
The Japan-U.S. social welfare treaty would be aimed at preventing double collection of public pension premiums from Japanese citizens working in the U.S. and American citizens working in Japan.
Under the treaty, such Japanese and American citizens would no longer have to make double pension-premium payments in both countries because they would be subject to either the Japanese or the U.S. mandatory public pension plan.
Such a social welfare pact is a great boon not only for Japanese nationals working abroad but also for their employers.
Under the Japanese public pension system, the premium payment burden for corporate workers is equally shared, in principle, by themselves and their employers. But in the case of corporate employees working abroad, their pension premiums are often paid completely by their employers.
The social welfare treaty with the U.S. would bring much more benefits to Japan than the one with Britain or the one with Germany because the U.S. has by far the largest number of Japanese corporate employees.
According to the Foreign Ministry’s Consular and Migration Policy Division, about 43,000 employees of private Japanese companies, excepting those employed by media organizations, were in the U.S. as of October 1998, the latest date for which figures were immediately available. The comparable number was some 9,000 for Britain and 5,000 for Germany.
Although Japan and the U.S. have held an informal exchange of views on each other’s public pension system for many years, the U.S. has so far been reluctant to conclude a social welfare pact with Japan, the sources said.
That is because the U.S., for years burdened by a huge federal budget deficit, did not want to lose revenue from the pension premium payments made by Japanese working there, the sources said.
Therefore, the recent U.S. agreement to open formal negotiations on the Japan-U.S. social welfare pact marks a significant change in its attitude toward the pact.
The sources explained that the rapidly improving U.S. fiscal condition has apparently brought the change in the attitude. The U.S. federal budget has swung to a surplus amid a booming domestic economy, which has expanded without interruption for more than nine years.