At a time when people's trust in the nation's pension systems is declining, some enterprises, especially small ones, are behaving in a manner that will weaken the reliability of social security. They deliberately choose not to join the corporate employees' pension system (kosei nenkin) while the number of people receiving kosei nenkin benefits is rising. Coupled with the hollowing out of the pension system for self-employed people (kokumin nenkin), their refusal to join the kosei nenkin scheme will undermine the very foundation of public pensions overall.
Under the Welfare Pension Insurance Law, businesses established as corporations and those run by individuals and employing five or more people must join the kosei nenkin system. Companies must pay 14.288 percent of every employee's annual income into the pension scheme. The cost is split by the employer and employee.
In 2004, the Social Insurance Agency under the Health, Welfare and Labor Ministry surveyed about 190,000 businesses suspected of having failed to join the kosei nenkin system and found that 27,200 had indeed chosen not to participate. The Board of Audit of Japan estimates that about a quarter of the nation's businesses -- 400,000 to 500,000 -- have not joined the system.