Democratic Party of Japan makes zero progress on the pension issue.

This is the takeaway from what is being commented on this weekend by the Japan Times.

In short, there are mainly two pension systems in Japan. One system, the employee’s pension insurance (kousei nenkin), piggybacks on the other, which is the national pension insurance (kokumin nenkin).

A Japanese government guideline has it, that workers who put in less than 30 hours a week in a job are not required to be enrolled in the employee’s pension insurance. (Everyone resident in Japan is required to be in the national program, the kokumin nenkin, but the government has not, to date, chased people around about that.)

Where Americans working in Japan get confused is that, since the government does not chase people around for the pension premium, they conclude that the pension is “optional”.

When I saw that the ruling party was looking to make enrollment into the employee’s pension mandatory at 20 hours (starting around 2016), it struck me that Japan was taking concrete measures to clean up its old age pension mess. This should be a concern, actually, to every taxpaying American, because when Japanese come to America, we allow them to gain partial credit in our Social Security system, even if they don’t have the 40 quarters. This is the totalization treaty that I’ve written about—probably more than anyone on the internet, in fact.

Because Japan continues to play fast and loose with its own pension system, the American taxpayer bears TWO risks. First, we must pay the Japanese who we agreed to partly cover, if they don’t have the 40 quarters. (You see this now as “40 credits”, but it is $4700 or so in social security-taxed earnings in each of ten calendar years.) Then, secondly, we cover Americans who did not participate in the Japanese system, if they show up back in America! They may be eligible for SSI, and also, they receive a bumped up payout ratio if they pay into social security late. They avoid Windfall Elimination, because they never participated in the Japanese system. It is basically a convoluted tax dodge against us.

From the time Minshuto won the election in 2009, I expected the minimum accomplishment would be a reform of the Japanese public pension system by 2013. This was in the “Manifesto”, wasn’t it? They had commercials out there, in that “Seiken Koutai!” series, where they were saying that people shouldn’t have to worry about old age.

Now, the indications are, that the government bureaucrats are screwing around with this—even as the Noda Government rightly seeks a 3% hike in the consumption tax to fund the current level of pension obligations.

The 30-hour rule particularly burns Americans, because the people who like to screw around with foreigners’ rights—including other foreigners in Japan—always seem to find a way to create some elegant bullshit reason why the employee’s pension is not required. So, when I saw about the 20 hours, I thought the people with power were finally playing it straight. But no.

6 thoughts on “Democratic Party of Japan makes zero progress on the pension issue.

  1. Hello! Im sorry if this is more of a question rather than comment. I was just wondering if u could help me out. I currently have national health insurance and have been residence tax on my own. this fiscal year, i paid almost 200k yen for both. Just today (just a week before my new contract with them starts), they said that all the staff should be enrolled in their shakai hoken package which includes the nenkin and other benefits. The thing is, if i enrolled in their system, i would be paying over 100k yen more which is heavy for me. Secondly, i really dont want to pay nenkin. I know they said its in the law but i went to the city office before and they told me that they cannot really force people to pay. Now going back to my school, they said there is no other option but to enrol. But i really dont want to. So i guess im going to lose my job. The question is, do i really not have an option in this situation? Thanks so much in advance!

    1. Well, there are a few things I need to know beforehand, and some which maybe I should tell you ahead of time:

      1. You do know that your nenkin payments are deductible against Japanese taxes (residence and national). So is the extra 100,000 yen before or after tax?

      2. What is your nationality? If you are: American, Canadian, Australian, New Zealander, then the nenkin contributions will help build your regular pension via the various “totalization agreements”. Alternatively, no matter what country you are from, the nenkin contributions are refundable to you, for up to 36-months’ worth, once you leave Japan. The only way to safely build a solid old-age pension is to start paying in when you’re young. It becomes much, much harder as you get older.

      3. Why would you quit your job, just because you are now following a rule that you should have been anyway? Contrary to whatever the ward office said, pension enrollment is not voluntary. They probably meant that you wouldn’t be chased down by them, if you failed to enroll. But now that Japan will be recording, in a national database, who is in the pension and who is not, what’s your chances of the same lackluster enforcement going forward? Not good, huh?

      Your school is doing you a tax-deductible favor. The health care portion will be much less out of your paycheck, and the nenkin pension contributions are something that is returned to you—either shortly in the future, or when you retire.

      1. Hello, of course the 30-hour stipulation is only a Pension Office internal guideline and its legal validity is currently being challenged as I write.

  2. Hello, the 30 hour stipulation is just an internal guideline of the Pension Agency (formerly the SIA) and is currently being challenged as insufficient reason to refuse an employee coverage. Of course, employers are loathe to pay 50% of the monthly premium and with the implicit cooperation of the Pension agency few do.

    1. Yes, I agree with you, and I know that the 30-hours is really just administrative guidance. I assumed that the Diet was trying to make it statutory, starting in 2016.

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