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Hi Blog. This entry is more of a query than a conclusive essay. I raise the question because we’re seeing the intended aftereffects of the 2012 revisions to the Immigration law (which allowed for NJ to be properly registered as residents on the Juuminhyou, but also centralized control of IC-Chipped Gaijin Cards in the national government) emerge. And allegedly more targeting of NJ in terms of social welfare schemes.
A friend of mine writes in (edited):
====================================
Don’t know if you’ve heard about the latest moves by the GOJ to milk foreign residents of their hard-earned cash. They are looking into NJ with the help of that new IC chip torokusho card and making people pay for the kokumin hoken health insurance AND nenkin pension they have never paid into.
I know several people who have been hit with this and it has drained their bank accounts. They can’t even afford the plane ticket to go back home and see ailing parents. They said a lien would be put on their account/pay checks if they didn’t pay.
A teacher I know (in his 40s) has been here some 10 years and has NEVER paid into the health insurance scheme nor nenkin. He called up city hall inquring about this and they said yes indeed he is delinquent will have to pay up all those missed years! They asked his name and he said thank you and hung up the phone!
Another friend of mine got zapped for back payments. Every month he was being charged fines/penalties for late payments. So even if he negotiated returning to a monthly fee he would still have to pay a huge amount in extra fees. So he paid it off lump-sum and has depleted all of his savings.
The health insurance is important as one needs that to ensure treatment here, but having NJ pay into the nenkin scheme if they feel they will not be here forever to pay into it is ridiculous. Any advice on how to get around this? I’d love to hear what you think on the matter.
====================================
COMMENT: We talk about Japan’s social welfare systems in detail in HANDBOOK FOR NEWCOMERS, MIGRANTS, AND IMMIGRANTS (and my eBook GUIDEBOOK FOR RELOCATION AND ASSIMILATION INTO JAPAN). Personally, I take the side of everyone paying in. I believe that everyone in a society should support the national umbrella insurance systems, because opting out by saying, for example, “I’m not sick now so I don’t need it; I’ll only sign up when I get sick,” is fair-weather freeloading, as if you’re expecting a return on an investment when you need it but you didn’t make the investment in the first place. (National systems can’t remain solvent like that. These issues were developed and ironed out during the Obamacare debates.) Also, saying that “I can’t see myself retiring in Japan so I shouldn’t have to pay into Japanese pension” is also bad logic, especially given Totalization Agreements Japan has arranged with a number of societies (also covered in HANDBOOK/GUIDEBOOK) for pensions to be started and completed in different countries.
That said, there are a couple of issues that affect NJ differently here. One is that one of the reasons why some J have not paid in is because their employer (who is responsible to pay in half of their employees welfare benefits if they work 30 hours a week and up, i.e., full time) didn’t pay in their half. This is often unbeknownst to the NJ employee and a tax dodge by the employer. Yet the person who gets chased down for the back payments is the NJ employee.
Another issue that affects everyone is that Japan’s pension system basically requires 300 months (25 years) of work before you qualify for any pension (although I have heard that might be changing to 10 years’ minimum investment). That’s the longest minimum pension investment for any industrialized society. But since that affects everyone, that’s part of the price you pay to live in Japan.
The difference is that for the Japanese public you get a nicer attitude and less draconian enforcement. Japanese just get official posters nicely cajoling them to pay into the social welfare schemes, but there is no real enforcement unless they want future pension payments (or to avoid public shame, as was seen in 2004 when Japanese politicians were caught not paying in). But for NJ, now that all of their visa and registry issues have been consolidated behind Central Control, their very visa renewals are contingent upon paying into social welfare, and they’re being chased and shaken down for the money. It’s a very different approach, and the newfound dragnet further encourages bureaucrats to scrutinize and treat NJ as potential social deadbeats. It’s one more official way to treat NJ as “different”.
Anyone else out there being officially shaken down? And for how much? Arudou Debito
52 comments on “2012 revisions to immigration and registry laws shaking down NJ for Pension & Health Insurance back payments”
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It’s about time the Japanese government start doing this. As regular readers here all know, it was a big debate around the time the old DPJ government proposed Guideline Eight. Guideline Eight was withdrawn WITH THE UNDERSTANDING that the new Zairyu card would usher in a tracking of who was paying into the social insurances and who was not.
Some writing I did in 2011:
https://hoofin.wordpress.com/2011/12/21/here-comes-the-new-japan-residence-card/
http://hoofin.wordpress.com/2011/09/18/japanese-pension-system-a-review-for-the-zairyu-card/
This was a long time in coming, and should surprise no one. The fact is, any Japanese who isn’t paying is also subject to these levies. The reason you don’t hear about it “on the internet” is that a Japanese would take it as an embarrassment. It’s like if your neighbor in America has been dodging FICA (social security), and then cries when they get an IRS levy.
Has anyone been denied a visa because of nonpayment yet? No evidence, is there? I suspect that as long as the visa holder acknowledges the liability, they get the visa renewal. (After all, no visa, no paying up on the liability.)
But there is no more under the radar.
Some countries don’t have the pension sharing agreement. The UK is one as mentioned on this site (from a good search I just did to fact check myself). However you can claim 70% of 3 years worth of contributions once you leave. For many people this would enable them to claw back a good part of the money eaten up by pension contributions. While it doesn’t help those who may have had savings wiped out, there is at least hope of getting it back eventually. Although the contributions from 3-25 years just dissappear. Unless you leave multiple times and claim multiple times, which apparently is fine. As it happens the UK pension is quite small so many people have private pensions. I wouldn’t want a transfer system to the national scheme anyway.
As for then health insurance. Teachers in eikaiwa are often on private schemes. For me this couldn’t work as there are coverage limits that eventually denied me cover so I was forced off into the national scheme and 8 months back payments. Having said that i do agree with the premise of a national scheme. I think employers should have explained to me the options at the start so I could choose.
This was the last straw for me when I left Japan years ago. I was working at a small company for over a year when tax time rolled around and the owner refused to give me any tax documents. He was even stupid enough to send me an e-mail saying he didn’t have to give me anything.
In March I went to the tax office in Minatoku to tell them I don’t know how to file my taxes because guy wouldn’t give me any forms. The looked up my info and said I haven’t paid any taxes and that they’ll have to bill me something like 250,000¥. I said I wouldn’t pay as it’s the responsibility of the company to send that tax money and I showed my bank statements where you could see the owner was withholding the amount of the tax from my pay every month.
As far as I heard they never did anything to the Japanese company. I had to take revenge on my own a few years later. It sucks though because I should have gotten that money back as a refund.
I agree 100% with Debito about social responsibility.
I disagree with singling out NJ using the image of ‘NJ criminals’ ‘taking advantage’ of Japan. I disagree with disproportionate amounts of time and effort spent in tracking down NJ in avoidance of payment. The Diet has recently approved the ‘My Number’ system and identity cards for the general populace;
http://www.japantimes.co.jp/news/2013/05/10/national/lower-house-passes-my-number-bill/#.Uagr7BwSFMs
Let’s see how many Japanese suddenly complain about invasion of privacy, and the evils of ‘big government’. Oh, look! They’ve already started!
http://www.japantimes.co.jp/opinion/2013/05/30/editorials/my-number-is-dangerous/#.UagsJBwSFMs
I know Japan has a totalization agreement with the UK, but I do not trust the GOJ to do it properly. I mean, they are constantly corrupt and inept so why should we?
Sure enough, as Steven points out above, in Japan “”However you can claim 70% of 3 years worth of contributions once you leave. For many people this would enable them to claw back a good part of the money eaten up by pension contributions. ”
So
1. Only the first three years (cue; get the hell out of Japan after that, or stay forever, no middle way)
2. Why only 70%? In cities like Hong Kong, its 100%! This is just typical Japanese government corruption again. Their middleman fee for the privilege of staying in “beautiful Japan”.
Instead, it is possible to pay from abroad directly into your UK state pension. Why go through Japan, just because I had the misfortune to be posted here for a couple of years? Well I can guess it is so they can skim their middleman fee off the top….
I was only yesterday weighing the pros and cons of staying in Japan, and this issue came to mind, and now I hear this, I think Japan is out of of my options.
Japan will screw up your pension.
Steven “Although the contributions from 3-25 years just dissappear. Unless you leave multiple times and claim multiple times, which apparently is fine.”
I hope this loophole doesnt get closed, its typical Japanese Govt ineptitude but it works in our favour to iron out the gross unfairness of not being able to claim back anything after 3 years of constantly being here. Other countries give it all back if you leave but, e.g. you have to take an oath that you are not going back to work there. Ever again.
So, leave every three years, claim back your pension payments, then start again. Sounds doable, for now….
About having to back pay months or years of insurance (they insure you for the past? Most illogical), surely the solution to this has always been to move to another city or Ku and start again? Typically, J cities only charge from when you started living in that city.
The question is whether they are going to pursue former residents for back payments who have moved on thru the new IC cards.
My issue with this is if you are an NJ with limited rights and no say on how your tax is spent etc, ie. we are gaijin then why cant we use our own gaijin insurance from gaikoku? After all, we arent immigrants, we are just guests, right?
The historical reality of insurance in Japan is that the postwar law originally said you must have “some form of insurance” which did not envisage hundreds of thousands of NJs bringing their own insurance from abroad. It meant Japanese insurance, kokumin Kenco hokum or Shakai hokum (hokum? Sorry, I mean Hoken)
And as opening up the insurance market to free trade is low on the USA’s trade talks wish-list, I don’t see this paradoxical situation being resolved anytime soon.
The insistence on back payments are just yet another disincentive to NJs staying long term in “Rip Off Japan”.
@Steven and others – When you submit a claim for the return of up to three years of payments, do you get back the portion that you paid in, or your portion plus what the employer paid on your behalf? Because if it’s the former, and your employer’s half of your payments is simply taken by the government, then the pension scheme is still taking advantage of you.
I knew this was coming back in 2009 and immediately went to my ward office in Nagoya (where I was living at the time) and explained to them that I was unaware of the system because my employers said it was “optional” and not a visa renewal requirement. They then gave me a year grace period, and I only had to pay ￥40000 in that time. Of course I then “went off” on my bosses for not telling me it was a requirement.
Right now I’m under the Kokumin Hoken system (because my company “conveniently” has me listed as working 29 hours–never mind that it takes MUCH MORE TIME to plan classes…
One thing I do echo is if it’s MY money being taken for the health scheme, shouldn’t I have a chance to vote HOW its spent??
It is my understanding that you only need to pay nenkin if you have a job and make over 1 million yen a year. You must pay hoken regardless. Begs the question about homeless and what they owe.
My insurance was always paid for 100% by my employer but at the same time it ended up being 50,000 yen a month, or around 3M yen for the 5 years I was in Japan.
I would much rather have had the option to have had private insurance, and banked the savings.
@Flyjin:
The reason Japan only refunds 70%, is that the payer got a tax deduction when the contribution was made. Usually, this is against:
National Tax (5% minimum, normally 10%)
Residence Tax (flat 10%)
and then, the kenko hoken, which is anywhere from 8% to 11%. So if you are avoiding about 25% in taxes, it would be no surprise that the J-government would only refund something in the neighborhood of 75% max.
In the United States, an early withdrawal from a pension program (so-called “defined contribution plan”) is subject to a 10% penalty AND the taxes on the withdrawal, as income.
The refund in Japan (dai tai ichi-ji kin, it’s called) is a one-time (“ichi ji”) event. People can’t apply every three years after leaving. Just once.
Where you say (3-25), it’s really more like (3-10). The Japanese government is strongly indicating that when the consumption tax goes to 8% in 2014, the vesting period for the Japanese pension will go to ten years from twenty-five.
BTW: the UK’s agreement allows UKers to pay into their home country’s plan for up to five years, instead of Japan’s. So it’s technically not totalization. After 5 years, the person must go into the Japanese pension. For all the countries with totalization, the payments in are never lost, in the sense that credits toward an old age pension are built with every contribution. This is the only way a guaranteed income annuity can work—and that’s frankly how private companies do it, too. So going bare on old age pension is the same moral hazard as going without mandatory health insurance: the person expects that the (public) welfare system will fill the gap in the 2040’s.
— Thanks for all your input, Hoofin. However, RE the 10-year vesting period: Let’s not count the proverbial prehatched chickens. We can’t say it’s “really more like 3-10” until it is really 3-10. Let’s not factor it into this discussion as it is not a factor now, thanks.
@5:
Japan does not have a totalization agreement with the UK. In fact the reciprocal agreement with the UK is one of the more limited in place, basically just providing exemption for temporarily transferred workes who are making continuing contributions in their home country.
Am here for 20+ years and all for contribution to society, i.e., paying for what I’ve used and what will benefit others. I’ve always been on annual part-time contracts (never seishain), and have never been on national health. I’ve always held private insurance. My work requires extensive business travel outside Japan, e.g., at least once per month and total time out maybe 3-4 months annually. Now I work for myself, want to ensure that A) all is “kosher” with the authorities” but also B) I’m not paying ridiculously high amounts to get both domestic and foreign health coverage.
Would they really go after me for 10 years of payments (since moving to my Ku)? If I haven’t paid for J health insurance, it means I haven’t taken advantage of it or abused it, since I don’t have a card to pay only 30%. (If I need a clinic for the standard flu, I pay 100%.) How could any ministry or agency justify penalizing one who hasn’t abused the system?
“The refund in Japan (dai tai ichi-ji kin, it’s called) is a one-time (“ichi ji”) event. People can’t apply every three years after leaving. Just once.””
“Japan does not have a totalization agreement with the UK. ”
Ah, the loophole is closed. And the reality of the revolving door of NJ hire is maintained! Its either leave after 3 years, or retire here.
The totalization seems just like tatemae and maintaining the illusion of the “western club”member” Japan.
I as well wouldn’t be against paying national health insurance, however when I came to Japan the company I was working for basically put me on private insurance. At my current place of employment, I’m on a less than 30 hours a week contract, which means that I have no company support. So if I do go on national health, I’ll have to pay more, and be charged backpayments. It just kind of sucks the way it’s laid out for NJ in this case. The secretaries (Japanese) at my company have more job security and support than the teachers (non Japanese). Though I am grateful to my company for the support it does provide. I wouldn’t mind paying into the national health system if I didn’t feel like I shouldn’t be a part of it.
FYI, for US citizens regarding totalization:
http://www.ssa.gov/international/Agreement_Pamphlets/japan.html
It includes this paragraph:
In addition to retirement, disability and survivors benefits, Japanese Social Security taxes cover several other benefit programs including Japan’s health insurance program. If the employer or a self-employed person certifies the worker and all family members who accompany the worker to Japan are covered by an employer-sponsored or other private health insurance plan while in Japan, the worker and accompanying family members can be exempted from paying Japanese Social Security taxes including contributions to Japan’s health insurance program and cannot receive health care services or other benefits under the Japanese health insurance system. If the employer or self-employed person does not certify that the worker and all family members who accompany the worker to Japan are covered by an employer sponsored or other private health insurance plan while in Japan, the worker and accompanying family members must pay Japanese Social Security taxes including contributions for Japan’s health insurance system.
— So, in plainer English…?
Flavio, you are an poster boy for the NJ insurance conundrum. Yes you buy “some kind of insurance” as the law originally stated, but it is not the kind of insurance the J bureaucracy wants you to, as they do not get a share.
What can you do? Keep relocating, perhaps (although this might also rouse the suspicions of some oer zealous bureaucrat in a new city or Ku you relocate to).
Why not just let sleeping dogs lie and if they send you a bill finally, then think about relocating, perhaps to Korea or somewhere that allows you to work in Japan without being in Japan, as you said you are only in Japan 8 months of the year? Is there some way you could use this fact, if it comes to the crunch, to claim you are not a full time resident of Japan?
You might need the assistance of your company to redefine your terms and conditions, but if you work abroad as much as you say, why not reside there and come to Japan on occasion? ie. not ordinarily resident? Is this doable?
Thanks for the input, Flyjin, but living outside is not an option. Significant other is in Japan, and life here is stable, enjoyable, rewarding.
I would not mind joining national health if 1) I were not penalized (after not using the system over the years) and 2) had an easy, affordable solution for insurance while on trips outside.
Debito: sorry, I don’t have plainer English for the IRS blurb. Anyone else familiar with this page and paragraph?
One thing people tend to ignore when considering totalization is the question of what proof do you have that you’ve paid in? My only proof are my “pay stubs” which honestly look incredibly fake as they are clearly just a selection of cells printed off of a (poor quality) Excel spreadsheet. Does anyone have any experience going to the nenkin kyoku and asking for proof of amount paid and time periods covered, or otherwise know some avenue by which we can ensure that our payments really are counted ~in the gaikoku~?
— From the Japanese side, I have received excellent proof that I have paid in. In fact, I was completely satisfied with how the local Nenkin office made sure that all my work from even the late 1980s was tallied in. I can’t say for overseas systems of proof.
@Flavio
You might get away with not having paid so far. Two people I know went to the local (Fukuoka) city hall and basically “confessed” that they hadn’t been paying for over ten years. The city hall told them to start paying immediately, but wrote off the arrears entirely. I suppose it could very much depend on where you live, or even on the individual you talk you.
HI Flavio, “life here is stable, enjoyable, rewarding. ”
Good for you, but surely so are many other places, perhaps some you go on business trips to? Life for many people post 3/11 was/is unstable, a daily nightmare of worry and not fun at all, and the as the job was just so-so, not worth suffering for. So I did a Flyjin and rightly so.
I just comment on this because 1. I don’t think Japan (Ok, Tokyo) is fun or stable at all and 2. People tend to develop frog in a well syndrome and forget that, in the words of “Japan” the band, that “Outside there’s a world waiting…”
@21:
The nenkin service (Japan Pension Service, the successor to the Social Insurance Agency) will send you statement at certain intervals. I know I got one when I was 45. Also, there is a way to sign up (in Japanese only) to see your account online. One thing here is to be careful that the agency only deals with you, or a representative that you’ve given proof of agency for. With some social insurance desks, it’s very easy for a criminal who wants information about you to engage in a bit of foreigner identity theft (either pretending to be you, or to be a “friend” helping you out). The JPS is tighter about what they give out.
United States social security used to send an annual statement of contributions and expected benefits. In the last couple of years this, too, has become an online service—no more routine mailings.
Japanese national pension and health care are an incredible deal compared with any other country I have lived in. It includes for example disability coverage, survivor benefits for your minor children, and loads of other things, yet national pension costs only 15000 yen per month or so, and health care is income-dependent and can be waived if you are poor. As soon as I learned about these systems, I joined them. You should also know that this year you can pay up to 10 years in back pension payments if you go to your local pension office and can show you were in Japan and over the age of 20 at the relevant times. Together with reciprocal periods from work periods you completed in your home country, for many people who haven’t paid that could make the difference for old age pension eligibility as well. The benefits aren’t a lot of money, but for now it seems like you get back more than you pay in on average, so even if you didn’t have to join (and you do have to join) it could be worthwhile. I believe you may even be able to collect benefits if you retire abroad (maybe you need to maintain status as a permanent resident? Not sure).
Welp,
You may obtain an official copy of your nenkin records at any time at your local city / ward office. Bring your nenkin book and some ID. The title of the form is 被保険者記録紹介会投票 (hi-hokensha kiroku shoukai katou-hyou). It contain all of the relevant details. If I recall correctly, it should be free. I usually request an updated copy every 3-5 years just to make sure that there are no issues. Keeping a copy for your own records is also in your best interests.
This may be hugely cynical, but all this cutting of years required to pay into pensions, agreements with other countries, clamping down on NJs who haven’t paid etc, seems to me to be a desperate attempt to claw money into the coffers to pay for the CURRENT pension provisions. Remember the big pension mess up a few years ago when millions of records were, ahem, “lost”?
I think Japan simply doesn’t have the money.It’s all gone. The pensions pot is empty, cleaned out by greedy beaureaucrats, pension advisor’s fees and terrible investments. Sorry to burst anyone’s bubble.
Interesting development and debate. I do notice the common misconception arising that because the company pays half of the Shakai Hoken and Nenkin payments that employees under Kokumin are therefore paying twice as much as they should. While it is true that the company and employee each pay half of Shakai (currently just over 13% of the salary each, though gradually increasing), the calculation for Kokumin is completely different and varies from municipality to municipality. Due to this difference in calculations, even though the employee pays the full Kokumin bill, I know of no cases where that bill is as large as the combined employer/employee contribution for Shakai. In fact, it is less than half in many instances, meaning many employees end up paying less by footing 100% of the Kokumin bill than they would paying only 50% of the Shakai bill. Let’s make sure we’re comparing apples to apples.
I’m mostly with DeBourca — the pension fund stockpile is likely dwindling, if not decimated.
I have refused to pay into it while living in Japan, despite receiving the monthly notice of a growing total. However, I may consider doing the 10-year back payments Bob mentions, because I’m considering retiring to a countryside area of Japan someday. That’s if I go back.
I have always paid into the (often overpriced) medical plan because I have two children. We used the system.
It is hard to disagree with those who say, “Why should I pay into a system where I have no say in how the funds are utilized?” So it is wise to withhold judgement of those who opt out. We are indeed treated as guests/2nd class citizens, therefore there should be a 2-tier system.
Flyjin #23,
“People tend to develop frog in a well syndrome”, you say. Well, under the current predicament it’s more the classic “boiling frog syndrome”: if you place a frog in cold water that is slowly heated, it will not realise the danger and will be cooked to death (vs. if you put in boiling water it will jump out).
Many NJs in Japan, alas, fall into the trap and bury themselves in debt and dead-end jobs over the years without realising the consequences (because being in Japan is in itself sooo cool that is worth any sacrifice!). Until one fine morning… they get a letter or a knock on their door (you know the rest of the story). I’ve got a couple of friends in such dire straits, and, cruel though this may seem, it was with some relief that I’ve heard of these new draconian enforcement methods, hoping it will serve as a wake-up call from the dreamy-day Japan. It’s not schadenfreude, believe me – it’s sheer concern for their fate in a country that seems on the verge of a precipice.
Debourca #27,
“I think Japan simply doesn’t have the money.It’s all gone. The pensions pot is empty, cleaned out by greedy beaureaucrats, pension advisor’s fees and terrible investments. Sorry to burst anyone’s bubble.”
Yes, but… is it only Japan? In a sense, all pension schemes have a Ponzi scheme component (http://www.economist.com/node/21530106). And, as things are going, it does seem indeed that “the entire economy is a Ponzi scheme”, as this recent article amply illustrates: http://www.washingtonsblog.com/2013/04/is-the-entire-economy-a-ponzi-scheme.html.
However, Japan’s Ponzinomics, oops, I mean Abenomics (aka Asset Bubble Economics “;o))) seems to have taken a step further – in despair at the demographic time bomb and the massive debt? – and is developing an even more… er… refined scheme:
http://www.telegraph.co.uk/finance/economics/10045933/Japan-is-adding-a-Ponzi-scheme-to-a-Ponzi-scheme.html
But to revert to the topic of this post: are pension payers and pensionists themselves in Japan aware of and concerned about the situation, as scores in Europe and the US are? (In my home country, e.g., scores are already organizing themselves and asking the government tough questions concerning the fate of pension contributions, protesting, etc.). I for one, as a pension payer in Japan, am extremely worried and already taking some preventive steps to respond to a worst-case-scenario, and also advising friends & family to do the same. These are, of course, very personal decisions people make based on their gut feelings (well, definitely not on reliable info from governments and banks!) and/or on the growing sense of unease that is taking over the world vis-a-vis the volatility of the economic situation.
What scares me in Japan is the tendency of way too many Japanese to conflate “love of country” and “love of government”, and thus to turn a blind eye to what’s going on and blindly trust what the government is doing and will do with their money, and readily accept any horrendous “sacrifices” that will be asked of them should (when?) things go terribly wrong.
Behind all this is a deep-rooted gullible mentality that Abe & his pals are beginning to exploit to the full. Just check this interview he gave in 2010 to Kobayashi Yoshinori – fresh from this week’s issue of Japan Focus:
“A great deal has been written about Abe’s understanding of 20th century history, but Abe’s broader historical vision and the ways that it collides with changes in the Japanese economy deserve more scrutiny. In the Kobayashi interview, Abe suggests that without some guiding moral force, the market is simply a form of “slaughter in the jungle”. “Conservative spirit” is necessary to build a “healthy market system”. He says, “Japan has been a country in which people have lived by tending the fields together and sharing the water. With the imperial family at the center, people prayed together for bountiful harvests and prosperity.” He believes that Japan’s market economy should continue to reflect this idealized past vision. This historical understanding serves to frame Japanese capitalism as something uniquely altruistic that must be protected from the outside. The assumption that Japanese power relations and capitalist system generally are somehow different and more benevolent in their securing of mutual benefits for all members of society serves to mask a great deal – poverty, exploitation, environmental degradation, discrimination, regional marginalization, and so on.”
Abe and History – The Kobayashi Yoshinori Interview
Jun. 03, 2013
Matthew Penney
http://www.japanfocus.org/events/view/183?utm_source=June+3%2C+2013&utm_campaign=China%27s+Connectivity+Revolution&utm_medium=email
Painful stuff to read, uh? Dark clouds are gathering indeed.
As far as I am aware, the Japanese pension scheme is a transfer from current payers to current pensioners. At the moment it’s something like 4 people paying for each pensioner.
Once that ratio drops to 3 to 1, 2 to 1, 1 to 1, or even 1 to 2, I can’t see the pension surviving in its current (fairly generous) form.
I’m hoping to receive a couple of man in my old age, but not expecting anything more.
People should know that social security pensions were never based on a trust fund. It’s always been “pay as you go”. The only reason there is a trust fund in modern times is that the baby boom generation was larger than the baby bust. If, for example, the US government did not collect “extra” contributions (tax) from the baby boomers, they would essentially free ride off part of the contributions of the baby bust.
When you look at social security / pension as an income transfer program, then it’s clear how the system can last over generations. It is built to last.
@DK
Those links and your posts summed up exactly what I was getting at. When in Japan, I always thought the whole pensions thing was dodgy, but never gave it much thought, mainly because nobody seemed to, least of all the media. However on relocating to a Western country where the dabate is raging, it’s really made me think.
If countries with (relatively) low debt, higher retirement ages and transparent systems are in this much trouble, how bad is Japan? Of course, just like the Fukushima thing, it’s impossible to know for sure.
Japan COULD have the pensions system sorted somehow, but the circumstansial evidence doesn’t look good. So by paying into the pensions system, you’re taking a huge gamble that it’s going to pay out in the future, which kind of defeats the purpose of a national compulsory pension scheme IMO. Interestingly, most younger Japanese I talked to about this were pretty much resigned to the fact that the whole thing was a Ponzi scheme, but just went “shoganai”
I believe the law says you have to take some form of national health insurance. If you do like some locals and avoid paying, that is unfair. Using travel insurance might seem practical, but you can use NHI for overseas medical expenses, too, even if only for reimbursement after you return. You don’t need travel insurance!
You are also required to make back payments, but only up to two years’ worth, so if someone’s bank account was drained, it must have had only that amount in it.
Pension is also a legal requirement. If expats don’t like it, don’t come here. They can get back a big chunk of it when they leave anyway. Most people do not stay more than three years which is the amount calculated for the lump sum withdrawal. Take it and run.
If employers welch on putting you on shakai hoken, they have merely taken advantage of the legal loophole open to them. What can we do to close it?
This is not a country for freeloaders. Be an adult who follows their moral responsibility.
@DK, @DeBourca, you are on the right track, but it seems both of you are reluctant to say it, so: Any kind of money you get from the government, be it pensions, health care, social aid, whatever, is money that has to be earned somehow. You can only spend what you have (well, in the long run anyway).
I take it that to US citizens, all this stuff is still a little alien, like it has been to so many Europeans (Germans, Scandinavians) for a long time until it became clear that health care for everyone and high pensions is a really expensive “luxury” for a state to give out which only works as long as that country’s economy is growing.
In Germany, there is this long-running joke, “The pension is safe!”, which was basically a promise made by former minister (Mr. Blüm) in 1986, but shortly after was proven to be impossible, with the pension age rising (now at 67 compared to 60 back then), all kinds of treatments and drugs not being covered anymore by public health care (making you pay for them out of your own pocket), and current ministers warning weekly that people are expected to save money for retirement because otherwise they’ll gonna end up poor in old age (meaning, not able to pay the rent etc.) – all this was unthinkable in the 80s.
What happened was that in the 90s, the government saw that the whole social system, but especially, public health care and pensions, was way too expensive to keep up and would go broke if no drastic changes were implemented, resulting in everything being scaled back considerably. And even back then the German benefits were much lower than in Scandinavia.
My point is that anyone who stays in Japan because they expect social benefits is taking, at best, a huge gamble on his / her future. Currently, there is no way to save the Japanese economy even in its current sad state. Japan is living in borrowed time and money, and as the country becomes poorer and poorer, living standards will crumble. All this stuff has to be paid for, somehow, and the government has already resorted to printing money in order to keep up the illusion of Japan being a healthy economy.
When this country goes broke, the Japanese citizens are expected to swallow the bitter pill of a third world lifestyle for the “sake of Japan” – will you be able to do the same for a country that doesn’t really want you around?
” Most people do not stay more than three years which is the amount calculated for the lump sum withdrawal. Take it and run.”
If true then once again Japan does not want immigration, just revolving door expats to come for 3 years, have a nice time, then leave and reminisce about how kind Japanese people were.
The system does not encourage people with a genuine interest in Japan, or in settling in Japan for more than 3 years, but who may not want to give up their NJ identity and home completely.
Its either visit for 3 years and leave, or retire in Japan. No third choice, no flexibility, how extreme, how GOJ bureaucracy.
@Glenski. I completely disagree, and I paid national insurance out of my own pocket for six years for me and my family.
Japan has a racially discriminatory system regarding health and pension insurance. I think it’s designed to exclude non Japanese. If they were really serious about being fair, they would take a base tax from employee’s wages to cover health, unemployment denefits pension etc, like they do in normal countries.
Instead, they have a system that favours Japanese employers and allows them to exploit the best years of foreign employee’s labour without accepting any responsibility to look after them when they retire: They can sod off back to their home country. It’s a disgusting, racist policy, and I’m puzzled why and non Japanese would defend it.
Well, well, these are volatile times indeed.
I was just about to type, in response to some of the comments above, that it’s quite interesting to notice the GOJ’s desperate attempt, over the past months, to sell government bonds (国債), which are being advertised in taxis, and by legendary sumo wrestlers and even AKB48 (!). Now, if we connect the dots and link this with what Abe says in the interview I transcribed above (#31), plus with this extraordinary Q&A the MOF has set up on its website for investors (http://www.mof.go.jp/jgbs/individual/kojinmuke/main/qa/), you get a pretty clear picture of the extent of the dire straits in which the whole system is:
Q: 個人向け国債の口座を開設している金融機関が破綻した場合、個人向け国債の元本や利子の支払いは受けられなくなるのですか？
A: 元本や利子の支払いは、国が責任を持って行います。
個人向け国債の口座を開設している金融機関が破綻した場合でも、その権利は保護され、元本や利子の支払いを受けられなくなることはありません。
Goodness gracious, where else in the world could a government so disingeniously say something like this – “If the whole system collapses (because we f**k*d up), please don’t worry. Trust us: we are the government! – and expect the people to be so smitten by 愛国 that they will believe them?
In the meantime, though, I’ve read this piece of fresh news which moves the whole thing to a new level:
The Problems With Japan’s “Plan (jg)B”: The Government Pension Investment Fund’s “House Of Bonds”
http://www.zerohedge.com/news/2013-06-03/problems-japans-plan-b-government-pension-investment-funds-house-bonds
To whet your appetite, here’s the epigraph:
“So long as public funds ultimately are governed by the government, which is controlled by representatives of the general public, risk tolerance is subject to the general public’s risk tolerance, and the general public’s risk tolerance is not necessarily high. If and when the stock market collapses and performance goes negative for some time, people, the media and politicians will complain loudly… Who exactly is responsible for the future payment of benefits? Those who make the promise today may not be the people to actually deliver on the promise in future decades. It is much easier to make a promise that somebody else is supposed to carry out. Here the future generation is not in a position to sign the contract at all. This is the critical agency problem.”
– Yuji Kage, former CIO, Pension Fund Association
I shall not draw any conclusions (except privately, of course) nor engage in fear-mongering, but my advice to anyone with vested interests in the Japanese pension scheme is to keep a close eye on what’s happening – not an easy task, and things are happening at light speed – and follow your gut feeling. The GOJ and the BOJ will be the last ones to tell the truth, that’s for sure.
Sendaiben #32 and Hoofin #33
Your data are clearly… outdated – and you are being over-optimistic, IMO. Read this, if you have the stomach:
James Shinn, “The Ant, the Grasshopper, and the Widow-maker Trade: Japan’s giant government pension funds sits on a mountain of government bonds – a low-return and potentially high-risk strategy”
http://jamesshinn.net/wp-content/uploads/2012/07/GPIF-Institutional-Investor-July-2012.pdf
“Japan’s public pension system was basically a pay-as-you-go defined benefit plan until the past decade, when Tokyo created the GPIF (Government Pension Investment Fund) and began a series of incremental reforms designed to put the country’s pension system on a more sustainable basis, such as increasing contribution rates and reducing benefits.Those measures fall well short of what’s needed to ensure that the GPIF will be able to redeem the promises made to today’s workers, though. Already, the fund is paying out more in pension benefits than it receives in contributions, an inflection point it passed in 2009.”
It’s a very long text, but contains vital information and is quite sensible in its approach, overall.
The comments by Glenski and others underline one of the fundamental problems: there is no single source of definitive, reliable, comprehensive information that covers all the questions and issues that affect foreign residents. The lack of predictability and reliance on anecdotes probably causes many to avoid the system, even if the system ain’t so bad.
@Glenski
The two year limit for pension is no longer true for the most part. I received some documents from the pension office (dated 2013/05/20) about being able to pay up to 10 years worth of back payments. I haven’t had the time to go through it properly, but the first paragraph says:
国民年金保険料の納付可能期間延長のお知らせ
これまで、国民年金保険料は２年を過ぎると時効により納めることができませんでしたが、法改正による時限措置として過去１０年以内であれば納めることが可能となりました。（「後納制度」といいます。）
後納制度を利用することにより、年金額の増額や年金を受給するための資格期間（原則２５年）を満たす場合がありますので、手続き等の詳細は２ページ以降をご覧ください。
なお、このお知らせは 平成２５年５月時点でお客さまが後納できる期間を作成したものです。
I know they were working on this up until 3/11 and then it got pushed aside for a while because of 3/11. By the looks of the first paragraph it seems somewhat optional, but ya never know how this stuff turns out. Gotta find the time to actually read through every . . .
@Glenski again
Sorry, I merged your two topics into one by accident. Need to work on my reading skills. Still relevant though.
People who disagree with the notion of national pensions will find every excuse to bemoan the program. In America, the program costs only about 5% of national income, projected to rise to — wait for it — six percent in the 2030’s.
The simple fact is that if you don’t have mandatory funding of these annuities, you have to develop some other funding source. The old refrain used to be “private accounts”. Then, 2008 happened, and many people lost a great deal of their private accounts. (How’s that working out for you?) They ended up delaying retirement or–relying on social security!
Correction: “You don’t need travel insurance!” Until you need it!
Relying on the fact that you can get reimbursed at a Japan equivalent level on your return isn’t going to help you if you have a serious problem overseas and the hospital is demanding advanced payment to help you out, or if you need a medical repatriation.
Traveling without travel insurance is a gamble even if you have home coverage.
And funny how social insurance suddenly becomes a good thing for people when they’re taking out of the system as opposed to putting in…
@Hoofin, #33
>People should know that social security pensions were never based on a trust fund. It’s always been “pay as you go”.
That’s right. Social security is the program managed by the government. This means it is funded by taxpayer’s money. I don’t know how much pension program is healthy and sustainable enough to cover all would-be retiring workers including NJ in the next ten years. Koseinenkin kikin is euphemism for corporate private funding, so you basically leave control of your pension money and return to your whimsical employer who throws your money into the black hole of financial market in Marunoichi. So, it looks even more insecure especially after the collapse of net assets worth ¥145.8 billion managed by AIJ Investment Advisor Co. late last year.
http://www.japantimes.co.jp/opinion/2013/05/16/editorials/protecting-a-public-pension-program/#.Ua4Iky8o7Mw)
I wouldn’t be surprised that the LDP-led GOJ sustained the kikin program regarding their pro-business position.
So my couple of man a month for my wife and I was somewhat optimistic 😉
Oh, well. Lucky I am not factoring that into my financial future at all.
Does anyone know if the ‘specialist’ pensions are ring-fenced and any safer? (doctors, public universities, etc.)
Our uni seems to have this mysterious separate but equal thing going on, where the kumiai handles the pension and the pension agency doesn’t know about payments made since I started working there!
Sendaiben #47
I think “mysterious” is really the keyword here.
A while ago, someone, paraphrasing Winston Churchill (http://www.phrases.org.uk/meanings/31000.html), described Japan’s public pension fund “as a Ponzi, wrapped in a Ponzi, inside an enigma.” (http://www.zerohedge.com/article/guest-post-plot-thickens-how-will-japans-largest-pension-fund-find-room-maneuver)
This pretty much sums up what the GOJ & Cia have been doing with our money…”;oP
@Loverilakkuma #46:
Actuaries have the Japanese pension system as actuarially sound for the next 85 years. On top of that, the pension is, as you point out, backed by the taxing authority of the J-government. They can make up a shortfall through taxes, where a private company cannot.
And you’re right: what happened with that one kikin? It was allowed to invest privately, and it went bust.
People who are against social security will come up with one creative excuse or disaster scenario after another. The people who do not want to pay in will do similar. The stories have been quite fantastic over the last several years, and I figure the spinning will just keep on.
What suprises me is that, with totalization, some of Japan’s prestige as a fair partner to agreements is on the line. Most all agreements say that Japan agrees to cover the other country’s citizen “on an equal basis” or language to that effect. Then, they don’t administer their side of the deal.
The people who are really going to be hurt by this are the ones working at eikaiwa gakkou (conversation schools) who bought into their employer’s private health insurance.
I was recruited by a mid-sized chain of conversation schools in 2010. This was just after the first visa-renewal-tied-to-health-insurance scare had blown over. Despite this, the school still pushed me very hard to enroll in their private insurance scheme. It was almost a condition of employment: I was only able to avoid paying into it because I had the help of a Japanese expert.
When I asked the other new-hires, none of them were aware that they should have joined kokumin kenko hoken (national health insurance). None of them were aware of the potential visa risks in future. None of them knew that, if they changed employers, they’d probably end up paying for their insurance twice. Very few of them were aware that, if they came down with a chronic illness, they’d simply be sent back to their country of origin, and both employer and insurer would wash their hands of them.
Those teachers will probably end up paying twice for their insurance. It really isn’t fair. The two year backpayment rule was designed to discourage people from playing the system, but in this case it was the employer who played the system.
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