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Tuesday, Aug. 24, 2004
THE ZEIT GIST
Pension system a riddle wrapped in an enigma
Community Page readers respond to Barry Brophy's articles on Japan's convoluted pension system
By BARRY BROPHY
For foreigners staying in Japan for more than three and less than 25 years, there is only one word for the Japanese pension system -- ROBBERY! -- Bhupesh
Politicians should pay up
The Japanese pension system is undoubtedly one of the most corrupt programs imaginable. As a foreigner having to contribute (by law) to this system, I feel empathy for the average citizen -- who stoically accepts rather than opposes this bureaucratic payment scheme. Only when government officials begin to get serious about reforms, then, and only then, should they ask the common person to take the system seriously. First, these officials should think about paying. -- Anon
How about dual pensions?
Thank you for the article. As a long-term foreign resident I found it most informative. I have been paying into the National Pension System for 18 years and, thus, the 25 year minimum is starting to look attainable. I have several questions:
1. In your article you refer to 60%, and later 50%, of "average monthly pay" as existing and future minimum pension payments, per the government. Do these percentages apply to each individual recipient or to the average monthly pay of all working people in Japan combined?
2. I have been paying into the U.S. social security system in parallel for many years as earlier I was uncertain how long I would remain in Japan and I wanted to be sure that I had some form of social security/pension in my retirement. I wonder if I will be able to collect both U.S. social security and the Japanese National Pension in retirement as I have faithfully paid both all these years. Any thoughts?
3. Any thoughts on medical insurance once I retire back to the U.S.? My wife and I are covered under National Medical insurance ("Kokumin Hoken"), but I think it cannot be applied if I no longer reside in Japan when I retire. I worry that buying medical insurance in the U.S. as a retired individual will be cost prohibitive. -- Arlo
1. The 60% figure refers to an individual worker's average pay (the government says it won't fall below 50%), but this only applies under the Employees' Pension System ("kousei nenkin"). For National Pension System ("kokumin nenkin") payees, the Old Age Basic Pension is a fixed-sum benefit. In order to qualify for full pensions you must pay into Japanese pension systems for 40 years, so that fixed sum is reduced in proportion to any shortfall.
2. If you meet qualifications for both pension schemes, you can receive both pensions. The Ministry of Health, Labor and Welfare says an agreement on social security between Japan and the U.S. that will enter into force as soon as next year aims to avoid dual coverage of the social security systems in the two countries.
3. Normally, you will not be covered by Japanese health insurance after departing Japan. In principle, Japanese health insurance schemes cover employees and inhabitants in Japan.
Re-entry permits still required
Very good article, including all relevant information and links. My experience agrees with ". . . officials may be unwilling to volunteer information unless asked the right questions . . .," although in some cases "unable" may be as, if not more, accurate than "unwilling."
There is a method to get reimbursed at least some of the 20% tax deducted, but good luck finding that information!
I did find one discrepancy in the article: To the best of my knowledge re-entry permits are still required even with permanent residency status. I will confirm this when (if?) I receive that status -- but have only been waiting a few months and expect to wait many more before I know for sure.
Thank you to the author for assembling the information and to The Japan Times for providing it to their readers. -- Pat.
Thanks. Yes, a number of readers who are permanent residents have informed us that they still have to apply for re-entry permits.
Lobbying for change
For almost six years I have been discussing necessary changes with officials responsible for collecting feedback regarding the pension system. I hope they are passing this feedback to respective lawmakers.
I have not seen the newly passed June version of the pension system yet, unfortunately, and cannot comment on the statement that the same system as the Old Age Employee Pension will be used for all pension types under the new pension bill.
While it is difficult to drastically change the pension system, I have proposed a minor modification to solve one of the major problems described in the excellent article by Barry Brophy.
Problem: You have to work/contribute for 25 years in order to be eligible to receive a pension.
Solution: In the formula used to calculate the pension amount due, REPLACE the constant 300 months (25 years) with the actual number of months one contributed.
Rationale: In the present system 300 months is multiplied by several factors and the monthly amount due is determined. If the actual amount of months paid into the system is used in the formula (vs. the mandatory constant 300 months) even people contributing less than 25 years are eligible to receive a pension.
1. This will still be in line with the government objective to give back the money to the vast number of foreigners who leave Japan before three years and prevent clogging the system.
2. A minimum required number of months when one contributed can be set, at 60 (five years) for example.
3. It will be fair for people who have been paying for 8-10 years and who, as (in the case of) global executives, have spent their life in different places, paying everywhere and perhaps NOWHERE qualifying for a pension due to similar obsolete laws.
3. This change will make the Japanese pension system fair and consistent with major developed nations. (Germany requires five years of contributions in order for the contributor to receive pension benefits anywhere in the world; U.S. requires 10 years.)
4. This quick solution will also solve the problem of the extremely slow agreements with other countries (only two so far, as pointed in the article) as it will apply to every nationality. -- Dr. Geo
Pension book misplaced
What does a person do if they've misplaced their blue pension book after leaving Japan, but still want to claim the pension refund? Is it still possible to request a new book? If not, is it at all possible to still claim the refund? -- Scott
The ministry says if you cannot attach your pension handbook or cannot confirm your Basic Pension Number or the pension book's registration number, you should list on your refund application form information about your previous workplace in Japan, personal data such as the name noted in the pension handbook, and your registered address in Japan. The Social Insurance Agency will use the information to locate your records in their database.
A third pension system
The Zeit Gist column "Your Golden Handshake" by Barry Brophy is full of useful information for those enrolled in the National or Employees' Pension Systems. Mr. Brophy, however, is mistaken in prefacing that there are "two types of pension system." There is a third, the Civil Servant Pension System. No doubt rather fewer foreigners are enrolled in this system than the others, but I am one of them (as a "same-as-Japanese" public servant in Shiga Prefecture). In as much as I will have put in only 20 years or so when reaching mandatory retirement, I and probably others would very much appreciate seeing a summary in The Japan Times of any differences in the rules, benefits, and refunds in this system compared to the other two. -- Mark
We confirm there is a Mutual Aid Pension for National Public Officials, Mutual Aid Pension for Local Public Officials and Personnel of Similar Status, and a Mutual Aid Pension for Private School Personnel. We will consider addressing these in detail in future, but for now all we can say is the ministry tells us "a topup pension (the third tier) is incorporated in the plans." "However, the first (basic) and second (earning-related) tiers are equivalent to the National (Basic) pension and the Employees' Pension Insurance respectively."
Moving to Japan
I am a Malaysian national. Currently, I work in Malaysia for a Malaysian company. I am married to a Japanese and plan to move to Japan permanently in three to five years. If I move to Japan at the age of 37 and get a full-time job, I will be enrolled in the Employees' Pension System. If the retirement age for my future company is 60, I will only be in the pension system for 23 years, short two years from the required 25 years. What will happen then? Do I still have to pay into the system for another two years even though I have retired? If yes, then how will the premium be calculated?
If I get a full-time job in Japan and am enrolled in the Employees' Pension System, and after, say 10 years, I lose my job, will I have to change to the National Pension System or will the premium payments for my Employees' Pension System be put on hold until I find another job? -- Nor Azhar
A hard one. The ministry says they need "background information such as when you came to Japan, and what kind of visa status you have (e.g. permanent residency permission)." "Depending on the situation, you might be subject to transitional or special measures within the framework of the current pension system." They strongly recommend you consult an official of a Social Insurance Office, who can provide you necessary information.
If you are less than 60 years old when you lose your job, "you must be covered by the National Pension System." If you find another job, you will resume Employees' Pension System payments where you left off.
Finally, we would like to correct the cutoff age for pension payments referred to in our first article. People enrolled in the National Pension System do not have to make payments after age 60, but those in the Employees' Pension System who are still working must pay until aged 75.