Japanese pension and ways to qualify: Part 2 of this season’s installment.

Ashley Thompson was kind enough to stop by the site and dialogue a bit about qualifying for the Japanese pension. Ashley wrote a column for the Japan Times newspaper, and a follow-up piece appears today.

The focus today is on the “kara kikan” or empty space. The Japanese seem to write this as カラ期間, with katakana for the character “empty”. Kara kikan is meant to allow you Japanese pension credit for months where you were not able to make a pension payment. This has been understood to mean months where you were outside of Japan, either as a Japanese citizen outside Japan, or as a foreigner who came to Japan after Age 20, and so therefore did not contribute to a Japanese pension along the way.

Ashley is saying her sources tell her there is no longer any kara kikan provision, because, sometime in the 1980’s, the Japanese government “required” (har har) every citizen to make pension payments, with few exceptions, no matter where they were in the world.

The Japan Pension Service is thus telling her that kara kikan is no longer available except for those cases from the 1970’s or early ’80’s.

I understand the situation a little differently, but it’s just my understanding: the kara kikan is still available to permanent residents in Japan, for the time that they actually lived outside of Japan, because they had been not part of the system at all when they lived outside of Japan. I remember this coming to me either from outside reading, or from the General Union in Osaka.

What I have been saying, is that if you have totalization credits, because you paid social security to America, or some other pension scheme in countries like Canada or Australia, then these years count towards the twenty-five that Japan requires for the pension. So you would not want to rely on kara kikan for those years, and in fact, with America, as the law stands right now, you would likely be penalized for qualifying for the Japanese pension separately. (See “Windfall Elimination Provision”.)

I don’t understand why this is such a headache for people, 5 1/2 years after the American treaty, but it is. I know the reason why, too: people either weren’t pushed into paying to Japan, or they were in industries that tend to avoid shakai hoken or informing their employees, even, of pension payment obligations in Japan. Even more, there maybe were “freelancers” in the Bubble Years and beyond, who didn’t file in America, and so therefore didn’t pay self-employment tax.

For a lot of reasons, a number of people didn’t do what they were supposed to, and now there is a mess.

Because I am the premier blogger on this topic in Japan and in America, I get wind of the problems when people start doing their online research. It falls into these kinds of categories:

20’s – “I really don’t care to pay it, and is there going to be ramifications if I don’t?”

30’s – “I have been in this country for a while, and my employer never signed me up. So am I going to have a problem in the future?” “I paid social security when I was in America, but nothing to Japan yet. Am I going to have a problem in the future?” A variant of this is about “private pensions” and the like, but it doesn’t sound like the people are that sophisticated to really know if they’ve got their future covered.

40’s – “I can’t get my employer to enroll me in the ‘company’ pension, and I don’t want to back pay for the time I haven’t paid into the Japanese national pension.” (That last part recurs with the 20- and 30-somethings, too, BTW.)

50’s – “I never paid Japanese pension, and now I don’t have enough time to qualify.”

– “I just learned (or I just realized) that I don’t have a pension, or any way to get one.” or “I don’t have enough time in any system to make a pension sizable enough to retire on.”

It’s like the circle of life, and it’s a circle that transmits messages. I get to hear all bands.

I still don’t understand why the U.S. Embassy is not making a big stink about these “gaps” and “hurdles”. Japanese who come to America are in social security from Day One. We treat the contributions as a tax, the employer must participate, and if they don’t, it’s tax evasion. We even have forms so you can dime the employer.

If you notice the pattern, it’s that this in an error that is cumulative. The people screwing around think that it’s a one-off. They screw one American, and then they move on to the next. But when the State Department finally wraps around this thing, it’s going to be about how 150,000 Americans didn’t get. Not that “we screwed each American for only X in yen and only for Y months.”

How to solve the problem for the supposedly intractable scenarios, like the ones General Union loves to focus on / milk? The Education Ministry / Justice Ministry should insist upon a certification for certain industries that employ a number of foreigners from countries with totalization treaties. This is a problem that can be solved in an afternoon. If you employ foreigners, you only get to do business if you cover the foreigners. This way, the clean employer is not stuck looking like the sucker, while unscrupulous employers come in and underbid.

Can you imagine what would happen to U.S. social security if employers could come up with systems to evade paying the 15% that the employer and employee share as a contribution? You see? This is why the IRS has forms.

It is time for Japan to get on the ball about this.