An information processing firm in Tokyo assigned to process the personal data of around 5 million pensioners outsourced part of the task to a Chinese company — in violation of a contract that prohibited subcontracts, according to the Japan Pension Service.
The outsourcing fell under the spotlight after it was revealed that around 1.3 million people received lower pension benefits in February than they were entitled to as income tax breaks were not adequately reflected.
The pension management body, which has seen a series of incidents of mismanagement related to pension records, has been investigating whether the involvement of the Chinese firm caused the lower payments.
Japan Pension Service chief Toichiro Mizushima told a Diet committee Tuesday that the Chinese firm entered the names of pension recipients’ dependent family members and that he had confirmed there was no risk of a leak of personal information.
While looking into the matter, the pension body found some delays and mistakes in data input by the Tokyo information processing company. Later Tuesday, Mizushima offered an apology to pensioners over the mistaken payments.
Seiichi Kirita, president of the Tokyo data processing firm, Say Kikaku, told reporters Tuesday that he was involved in the establishment of the Chinese firm and viewed it as a group company, although there were no capital ties between the two.
Based on a contract signed last August with the pension management body, Say Kikaku had promised to hire 800 people for the data entry job. But the company had hired only over a hundred as of last October.
Following the outsourcing revelation, the Japanese government decided to delay the launch of a new system to share pension data between the central and local governments, originally scheduled to start this month. The system using government-issued My Number identification numbers was meant to simplify pension-related procedures.
Under the My Number social security and tax number system, 12-digit identification numbers are allocated to all residents of Japan.
Health, Labor and Welfare Minister Katsunobu Kato said the Tokyo firm handled My Number-related information for the 5 million pensioners, but its processing was not outsourced to the Chinese subcontractor.
“We will review data processing methods to prevent similar incidents from happening,” Kato said.
He said the launch of the new data-sharing system will be postponed until the ministry completes checking all outsourcing work commissioned by the Japan Pension Service.
The organization became aware of the outsourcing late last year and launched a special audit of the Tokyo information processing firm in January and subsequently the Chinese subcontractor, according to Mizushima.
The Japan Pension Service was originally scheduled to start using My Number identification data in January 2016, but the plan was suspended following a massive personal data leak from the organization due to cyberattacks in May 2015.
In 2007, the organization’s predecessor was also found to have lost around 50 million pension records due to sloppy data handling.
In November last year, the government issued an ordinance to that allowed the Japan Pension Service to share data online through the My Number system with municipal governments from March.