The latest annual statistics (Table 5.M1) from the Social Security Administration.
I wrote about this specific thing about a year and a half ago. The reason we are committing to cutting these checks to the Japanese is that there is a totalization agreement between Japan and America, and it’s been in force since October 2005.
In the agreement, if a Japanese comes and works in America, we will acknowledge their social security credits, even if they don’t sum up to the required 40 credits. (This used to be called “40 quarters”, and represents about $1200 in earnings for each credit. You can max your credits for one year, by earning about 4 * 1200 = $4800 in covered social security employment.) You can earn 40 credits within ten calendar years.
If the Japanese goes home and contributes enough to either the National Pension, or an employer program like the one in Shakai Hoken, those years will be included in a “totalized” ten years. So three years in America, and seven in Japan, will mean that America will pay a social security check on the three years of contributions. This is true, even though Japan requires 25 years for its own program!
As you know, Americans are generally cheated in Japan out of participation in the correct employer pension program. This has gone on for many years, and continues even after the totalization deal was signed. Because the victims are generally younger Americans, many of whom do not understand how they are even being cheated, the social pressure does not exist in Japan to fix the problem. The U.S. Embassy takes the complaint, does little, and gets ready to hang out at the next “friendship building” party.
This continuing injustice will only be remedied when someone makes an issue about it here, where the $7 million is being paid out. (By the way, this number is set to grow and grow. And the Japanese have one of the longest life expectancies.) I theorized last year that an American would have standing to try and get the totalization deal shut down, but, as you know, litigation is a long slog; and this is the kind of issue where you really need a class of victims to make the point stick with a judge. The current victims won’t realize they’ve been burned on their Japan employment until the early 2040’s, so you see where that would go.
Every year this unfair arrangement will grow and grow.
[Update: Japan continues as the #2 beneficiary of totalization, behind Canada—which does properly enroll us.]
[Update 11/18/12: Someone had asked me if $7 million a year was really anything for the US government to get all worked up about. Well, yes and no. As you can see, I include the birth year for people who reach early retirement. As of 2011, this was 1949. So anyone born that year or earlier can collect on the retirement portion of social security.
This number is going to grow considerably. As more of the postwar generation in Japan, who had experience working in America, retires, the $7 million will become $21 million, $50 million, per year. Remember, we are talking only about Japanese who did NOT get the 40 credits. Someone gets 40 credits, they don’t worry about totalization for the US check. They need 25 total years for Japan. The problem for us is that Americans in Japan are not let into the proper employer pension system (or told to “go enroll” in the National Pension, which most all young Americans blow off). The noncompliance has the effect of lowering wages for everyone in occupations such as English teaching. Through this two-step, Americans are cheated out of the pension.
If your American employer doesn’t withhold social security, the IRS actually has a form for you to turn the employer in on it.]