Social Insurance Agency moves to enforce the collection of national pension premiums

In past issues, on frequent occasions it has been discussed how the lingering depression, the declining number of children, and the growing elderly population have increased social security costs, straining various labor insurance finances and forcing society to come up with immediate solutions to these serious problems.

Generally speaking, Japan's universal pension insurance coverage is made possible with the following three programs: employees' pensions which all corporate employees must subscribe to, in principle (the burden of premium payments is split evenly between labor and management); mutual aid pensions targeting public employees; and public pensions to which the rest of the people subscribe.

As of March 31, 2002, a total of 22.07 million people were covered by public pension insurance. Those insured under this program are between the ages of 20 and 59, and include self-employed workers and their spouses, students, and other individuals, who are obliged to pay a premium. Many subscribers are low-income earners and elderly persons, and, unlike employees' and mutual aid pensions whose premiums are automatically deducted from members' salary, the public pension scheme has long been faced with the problem of a large number of non-paying subscribers.

In FY2002, premium-collecting duties were transferred from municipalities to the Ministry of Health, Labour and Welfare's Social Insurance Agency. This proved to be an unwise move, with the non-payment rate reaching levels as high as 37%, threatening the collapse of the public pension system if no counter measures were taken.

To rectify the situation, the Social Insurance Agency decided to take a hard-line approach to collect premiums. It plans to identify about 10,000 non-paying subscribers who, despite having substantial incomes, refuse to pay premiums, and issue final reminders and other notices. If they still fail to respond, the Agency will resort to forced collection such as seizing their bank deposits and other savings.

The large number of non-payment subscribers may be attributed to (1) a considerable number of people who are very unhappy with the large difference that inherently exists between public pension insurance and the two other pension systems; (2) a lack of interest and trust in the program among the younger generation; and (3) a considerable number of individuals who were forced to change from employees' pension to public pension after losing their jobs through corporate streamlining and other measures. In other words, there is now a growing number of people who either do not want to, or are no longer able to, pay premiums.

The Minister of Health, Labour and Welfare announced his intention of presenting a reform draft that integrates pension, medical treatment, and nursing care systems. It remains to be seen how or whether this reform draft will incorporate a ceiling on insurance premium burdens as a whole, as well as specific numerical figures and other factors.