One more post about the Japanese pension system, and then I’m giving it a break for a while.

I figure I will throw in one more post about this topic. But after a while it just gets boring, so I am on to something else for the weekend.

Over on Debito’s fine blog, there is a little bit of confusion going on (after comment 50) about which pension systems (and which health insurances) are what. I did an answer on the comments there, but in fairness there needs to be a bit more detailed explanation.

I have been around Japan for four years, but I do not pretend to be the expert in it by any means. But a certain amount is clear:

There is a National Pension (“Kokumin Nenkin” or 国民年金 ), and an Employees’ Pension (“Kousei Nenkin”  厚生年金, which is part of Social Insurance “Shakai Hoken” 社会保険 ) I have already described the National Pension. This is the one where you pay (right now) 14,660 yen a month, and you are promised an estimated 1,650 yen a year (138 yen a month) at retirement for each payment.

I talked a bit about how the totalization treaties help to make this not such a big loss at all (compared to how it was before the treaty) because potentially Japan will pay out in the future on even one month of nenkin contributions. This is my case where I already had 24 something years in the American social security system—from my first high school job at age 15—and so what I put in here over the last four years is just continuing the program from before. (24 + 4 = 28). You see, I am covered both here (25 year vesting) and there (10 years in the form of 40 quarters).

Today, a poster at Debito’s wanted the distinction made between the Kokumin Nenkin and this thing called Kousei Nenkin (mentioned above).

The Kousei Nenkin program includes the Kokumin Nenkin within it. So if you have this employees’ program through your work, you don’t have to run down to AM/PM or Lawson with your nenkin coupon every month. When I’ve had that kind of employment, this is what the situation was. Very nice, very easy. I pay half the premium, the employer pays half. It is based on your average earnings for the prior April, May and June.

The commenter at Debito’s pointed out the payment for the pension portion of Kousei Nenkin can be as high as 47,585 yen. That is right. It is the amount you pay if you are in the band “34”, 30 (34 is the health insurance band column, 30 is pension) having made approximately 620,000 yen a month the prior April, May and June (or expected to make it if it’s a new job.)

Here is a link to Pasona Corporation showing the typical Kousei Nenkin schedule.

When you pay Kousei Nenkin premiums, the benefit you get is calculated differently than National pension.

You can find a lot of this, by the way, at the Japanese Social Insurance Agency website: Here

The front page looks like this;

SIA site employee pension

Of course, you still get the 1,650 yen a year at retirement for each payment into Kokumin Nenkin. (I have described this as 138 yen a month because it’s easier to match to the monthly payment.)

With Kousei Nenkin, then, you also get the employees’ pension part. In short, this is about 0.579% of the earnings in your band. At the max, which remember was Band 34 Band 30, someone who is being figured off 620,000 yen a month gets another 3,589 yen per year at retirement (299 yen a month). So that Band 34 30 payer is increasing their retirement check by (138 +299) = 437 yen for each monthly payment.

I leave the enterprising reader to study the chart and do the math, but it’s clear that at Eikaiwa money (3 million yen a year) — Band 20 — the pension payment is 19,955 yen a month. And you would at retirement get 1,650 yen plus another (250,000 yen monthly wages times 0.579%) = 1,447 yen a year. So one month’s payment is giving you 3,097 yen a year or 258 yen a month more at retirement. For just a little bit more than the Kokumin Nenkin coupon, you are almost doubling what you get in a retirement check.

Let’s all be honest though: most 20 something-year-olds aren’t even thinking this. 30 somethings, you might catch their attention. People 40 and above it’s easier to get them to listen. 50 and above you can definitely get them to listen. But by then if the older group had done nothing, it’s probably too late. So a situation like that.

If you check out that Social Insurance Agency website where I give the picture, you’ll notice they describe Kokumin Nenkin as Part A and the additional part of Kousei Nenkin as Part B And the exact numbers change: 1,650 yen used to be 1,676 yen. But these are adjustments for both inflation/deflation and average wage level. Japan has deflation in either prices or wages, or both, from time to time. So the government wants to adjust for this. I don’t know what the score is as of 2009. But the estimated figures are something like these.

Enough about the math.

If you look at the Pasona chart some more, you notice other columns and these relate to Employees’ Health Insurance. Here, the contribution depends on the company program. When I worked for a big American international company (one with “International” in its name and leave it at that), the maximum band was 980,000 yen and the premiums were about 2 or 3% of that.

When Japan Times and the General Union report that visa holders are going to have to prove health insurance coverage, an employees’ health program should of course qualify. And of course the national health insurance program. But what is being said is that Interglobal, Global Health and Viva Vida will not meet the test.

If this is true, then it is a real shame that more of a heads up is not being given out—even if the companies themselves would agree to rebate in the event that their coverage won’t meet the Japanese immigration office test.
I’m afraid there’s going to be a lot of wailing and nashing of teeth in 2010 when people find out they owe the last two years of health insurance premiums because they dealt with a company the Japanese didn’t really recognize.

One last topic: If the Employees’ pension and health insurance are so much better than the national pension and health insurance, can you just ask your employer to enroll you?

My answer, in short, is good luck.

If you notice on the Social Insurance Agency website, it says:

You must be covered by the Employees’ Pension Insurance system if you work for a company or a factory which employs 5 workers or more, or if you work for a HOJIN corporation. A company or a factory here means one in business specified by law, such as manufacture. You must be covered if you are younger than age 70, irrespective of your free will or nationality.

Above, the company is “required” to enroll its employees if it is a HOJIN (means a corporation like a kabushiki kaisha or K.K.). Also, if it is a “company or a factory” with 5 or more employees. The Japanese point out that “company or a factory” is a defined term. What the SIA is saying is that it interprets the rule to mean a company within a list of about 16 kinds of businesses.

By implication, then, any business that can argue that it isn’t engaged in the 16 categories, OR any business that can divide out their employees into subsidiaries of 4 workers or less, will try to get around this law. For Japanese readers, it all has to do with how a phrase ending in “atte” (“existing”) with a comma next, is interpreted.

I was given the runaround (taraimawashi) in the Summer of 2007 when I tried to get enrolled in the Shakai Hoken of an administrative scrivener who it turned out was running at least three other businesses. He employed way more than 5 people, and even had a HOJIN as a subsidiary. But he successfully argued that he was outside the 16 categories himself. And so therefore did not have to offer the employee program.

At the time, I took the matter to Congressman Tom Lantos of California, who has since passed away. I pointed out that based on the U.s.-Japan totalization treaty, Japan is supposed to offer its pension program equally. (Meaning: Japan is supposed to follow the letter of the law. Not that if the Japanese cheat the Japanese themselves, then its OK to cheat us, too).

As is typical, I think someone named Forrest in Congressman’s office wanted to know if I lived in the 12th district or whatever in California. But I’m from New Jersey, and this really was frankly a federal (treaty) issue, not a constituent one. That blow off was really pissing me off. Then, I later got word through another avenue in Congress that the Congressman was very sick with cancer, and so I never made any further inquiries to advance the issue.

For what little I know of Japanese, I think it sounds like the law actually requires any firm of five or more people to enroll (even outside the list of 16); and firms of four or less can be exempt (since they are small firms). That’s probably what the Japanese side of the negotiation told the Americans during the treaty talks. And then, once the ink is dry, the Japanese Shades of Gray game begins. America gives and gives, the Japanese try to get the better of the negotiation after the fact through ambiguities. Ah, it’s eternal. But anyway, what can you do?

If you notice the SIA site, the last update was September 14, 2007—it used to read differently in English. This was shortly after I lobbied both my government and the SIA to get some relief on the issue. The coincidence of it made me wonder a bit.

Before the issue, this is what the site said, courtesy of early 2007 version

You must be covered by the Employees’ Pension Insurance system if you are a worker of a company or a factory which employs 5 workers or more or if you are a employee of any HOJIN corporation. You must be covered if you are younger than age 70, irrespective of your nationality or citizenship.

Nothing specifying that “company or a factory” is limited to specific categories, and that others are exempt regardless of how many employees they have.