Japan pension insurance: Kosei nenkin hoken is NOT kosei nenkin kikin.

A handy website found through a search engine.

Today, Japan Today has a piece out saying that the two main systems in Japan are Kokumin Nenkin (national pension) and Kosei nenkin kikin (employer pension fund). I believe this is wrong. The second program is Kosei nenkin hoken (employer pension insurance).

(It may be that “kikin” is actually the #2 in size, but I doubt it.)

What the Japanese government is proposing to eliminate is the employer pension fund where the money is managed privately, with the government backstopping in the event of a loss. With Kosei nenkin hoken, the government regulates the plan from start to finish. It is still employer-based pension coverage, but under national regualation. “Kikin” is more like an opt-out from the program, where, if things blow up, the government comes in and fixes things.

You can obviously see, where a “kikin” scheme just invites the fund investors to go play casino with the money. The taxpayers were on the hook when things didn’t work out.

The AIJ scandal has obviously taken that kind of arrangement out of consideration going forward . . .

[Update: I would have re-written the Japan Today headline to say, “Japan to discontinue insurance on Employee Pension Fund systems”, and then identifying these (i.e. the “kikin”) as different from the kosei nenkin hoken type.]

[Update #2: For the American, what is the kikin program similar to? It would be as if part of your social security money could be diverted into an investment pool that your company managed. Then, if that fund went bust, Uncle Sam would make good on whatever monthly check you were supposed to get on that piece.

We don’t exactly have anything like that, except the Republicans propose it from time to time. We do have the defined contribution 401(k), with no government backstop. We also have PBGC (Pension Benefit Guaranty Corporation), for corporate pension systems which are in addition to social security. Again, not exactly the Japanese situation.]