Business

Japan mulls expansion of pension coverage to include more part-time workers

Kyodo

The government is considering incorporating more part-timers into the employee pension program by requiring companies with smaller workforces to participate, according to government sources.

Currently, companies with 501 or more employees must enroll in the kōsei nenkin program. Under the plan being considered, that threshold would be lowered to 101 employees in October 2022 and 51 in October 2024, the sources said Tuesday.

The move comes as the government aims to increase pensions people receive amid concerns among workers about whether they will have sufficient financial resources to live on after they retire.

In June, the government caused controversy over the viability of the pension system when it released a report that a couple who will live to be 95 years old would need at least an estimated ¥20 million ($184,000) in financial assets.

Although the government later retracted the Financial Services Agency report that caused the stir, it still caused public anger, anxiety and despair over the health of the pension system.

If realized, the two-step expansion in the employee pension program will bring 650,000 workers into the system.

With both the employer and the employee contributing equal amounts into the pension system, the amount to be paid by firms in total is expected to increase by ¥159 billion as a result of the expansion.

The government has been seeking to abolish altogether the threshold for firms to be a part of the pension program. But the latest plan does not set a deadline for complete elimination, in consideration of the situation of small and medium-sized enterprises.

The government had been thinking of lowering the required number of workers for enrollment in the program to 51 or above effective immediately, but firms have urged the government to handle the matter carefully as they hope to minimize the impact on their operations.

The current employee pension program targets part-timers at firms with at least 501 employees who work 20 hours or more a week and are paid monthly salaries of ¥88,000 or more. The hour and salary requirements will not change under the proposed expansion.

In Japan, around 44.4 million people working at private firms and in government positions are members of the employee pension program, with the insurance premium fixed at 18.3 percent of a monthly salary.