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Saturday, June 30, 2007

Q&A

Why the big fuss about SIA? Some answers


Staff writer

Two bills to replace the Social Insurance Agency with a government corporation were set to be enacted in the early hours of Saturday morning, despite the opposition camp's last-ditch attempts to stop the vote in the House of Councilors.

The bills are a response to a number of problems at the government's public pension-handling body going back three years.

In 2004, it was discovered that the SIA had spent pension money for bureau- crats' housing and entertainment. Thousands of officials were punished in 2005 for taking peeks at the personal records of politicians and celebrities. Then the public learned last month that there are 50 million unidentified pension premium payments at the agency.

But the government's bills are drawing heavy criticism for being weak and not addressing the problems at the agency.

Here are some answers to common questions about the bills:

Once enacted, what will the legislation do to change the way pensions are managed?

The two bills will allow the government in 2010 to close the SIA and set up a wholly government-owned corporation to manage the national pension plan under the supervision of the Health, Labor and Welfare Ministry.

The government will outsource some of the work to the private sector, but the bills do not specify which jobs will be given out, only that a panel will be formed to decide.

The new corporation will rehire SIA workers, but they will have to be reinterviewed for their positions and if they are taken back, they will lose their status as public servants.

"The major purpose of the bills is to take away the status of public servants from the SIA officials," said Kazuhiko Nishizawa, senior economist at Japan Research Institute Ltd.

Why does the government want to stop treating the workers as civil servants?

The government argues that people's efficiency will improve if they are exposed to the performance-based pay system, which will come with their new status.

The government blames the SIA employees for the pension records fiasco, saying that being in the national civil service allows them to do sloppy work because they are protected from being fired or otherwise disciplined.

However, pension experts are skeptical that a change in status alone will improve the management body's performance, because the new corporation will still be government-owned and, subsequently, not exposed to market scrutiny.

The Democratic Party of Japan argues that the new corporation will simply create hidden public servants because their salaries will be paid by taxpayers. The DPJ also said the salaries at the company will likely be higher than at the SIA.

The party also said that by removing their status as public servants, senior executives retiring from the new entity will not be subject to the new "amakudari" rules, meant to cut down on the government practice of getting bureaucrats lucrative positions at private-sector companies after they retire.

What other problems are there with the bills?

As a corporation, the new entity will no longer be subject to Diet scrutiny.

The opposition camp argues that the government is changing the status of the management body so it will not have to answer to the Diet for the pension problems.

Japan Research's Nishizawa said the fundamental problems of the pension system remain. They include issues of how to handle the growing number of people who refuse to pay into the pension plan and the high premiums for low-income earners.



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