Some Expatriates Feel Pension Pain in Japan

(pressebox) Berlin, 14.03.2011 – Tokyo, 14. March, 2011 – The number of participants in the public pension system in Japan has been in decline for years, leaving some 420,000 elderly people without retirement incomes. Reform is underway, but the pace is slow. The public pension system in Japan involves two separate institutions, the National Pension Insurance (NPI) for self-employed persons and the Welfare Pension Insurance (WPI) for salaried employees. At present, the NPI premium is fixed at JPY15,100 per month, the WPI premium is set at 16.058 percent of monthly standard remuneration (MSR). Half of the WPI premium is contributed by employer. To become eligible for payments, the insured person has to pay into the system for at least 25 years. In addition to WPI, employers are obliged to contribute to a health insurance, unemployment insurance and worker’s accident compensation insurance which together provide social security in Japan. Total deduction come to approximately seven percent of an employee’s total remuneration. In the case of expatriates transferring to Japan on foreign assignment, they are obliged to participate in the WPI if their salary is paid in Japan, even though they may be covered by social security in their native country. However, agreements to eliminate dual coverage have been reached with a number of countries, including Germany, the UK, Korea, the USA, Belgium, France, Canada, Australia, the Netherlands, the Czech Republic, Spain, Ireland and Italy. The Japanese Government is currently in discussions with countries such as India, Brazil, Hungary, Austria and Slovakia. In view of the fact that China intends to impose pension insurance premiums on foreign nationals working in China soon, negotiations with China are also urgently needed.