Japan Today

Labor ministry to scrap employee pension insurance system


The Ministry of Health, Labor and Welfare Friday said it plans to abolish Japan's employee pension insurance system.

The Japanese pension system is mainly composed of national pension insurance, "kokumin nenkin" in Japanese, and employees' pension insurance, "kosei nenkin kikin." All residents of Japan aged between 20 and 60 are required to enrol in the national pension.

After a scandal in which pension funds placed in the hands of AIJ Investment Advisors Co vanished, the ministry set up a task force to deal with the financial problems faced by Japan's pension system. The task force proposed scrapping the employees' pension insurance system. Financial analysts say many employees' pension insurance system funds were AIJ customers.

At a press conference this week, senior vice welfare minister Yasuhiro Tsuji, who leads the task force, said the system is scheduled to be scrapped after a transitional period, Sankei Shimbun reported.

Employees' pension insurance system funds are corporate pension funds that also manage part of the state-run national pension insurance system. Many analysts believe the ministry's move is designed to address the plight of financially troubled national pension system funds.

The announcement comes after the Government Pension Investment Fund (GPIF) posted a negative return of 1.85% in April-June 2012, a loss of over 2 trillion yen. It was Japan's sixth biggest quarterly loss in terms of value since the GPIF began supervising pension money in 2001.

The GPIF reports that pension contributions have been falling short of pension payouts since the 2009/10 financial year.

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This strikes me as the wrong solution to a legitimate problem (or perhaps a solution to a problem they don't want to admit?) I would think that it would be a mistake to eliminate private employee pensions as a system just because the oversight was lacking. It seems to me that the obvious solution, rather, would be to increase oversite so that the designated funds are competently managed. Mind you, a competently managed fund has the potential to take intelligent risk (yes, there is such a thing) and leverage greater returns than the national pension system is capable of providing.

Which leads me to the second part. I try not to be too conspiracy-minded, and I really dislike those who see black hands behind every move, but I cannot help but wonder if the abolishment of the personal scheme is not in some way linked to the fact that the national scheme is losing its ass in the markets. Could it be possible that the Japanese Govenrment is using its power to govern to legalize a massive capital grab?

2 ( +2 / -0 )

This is great news for all the foreigners on pissy salaries that have had 17% of their salaries raped for a pension they cannot get. However, what about all the funds that have been paid and, not only by foreigners? Will the japanese people who have paid it for less than 25 years get their money back? Will they get a part pension? Can us foreigners get our money back now? Or do we have to wait till we are out of japan for a year? Will we ever see the money again? Has it slipped into the AIJ void? This move will create more problems than it will solve, but they are already at a 2trillion yen loss and there are also 2 million 'lost' pensions. Personally, I don't give a rat's ass about anybody else, but I want my money back! Today!

1 ( +2 / -1 )

Can't control it so scrap it... No mention of making it a workable system. So what happens in the future? What actually happens to the money paid in...? They say one thing do another.

-1 ( +0 / -1 )

I want my money back.

Here's an idea, stop giving people a pension if they havent paid anything or very little into it. How many billions of ten have housewives gotten out it when they've contributed nothing?! They get more in pension that single women who have contributed until the age of 60. Unreal.

I'm more than happy to stop paying and invest my money myself - invest already. How many idiots out there save nothing an expect the state to look after them? Rude awakening for some.

Now give me my contributions back!! Surely they'll have to do something for folks like us who've paid for years but have years to go before we can start receiving it.

-2 ( +3 / -5 )

Singapore have their pension system right. They attract the all-star fund mangers of the world to intelligently invest pension contributions - the returns are pretty amazing.

1 ( +1 / -0 )

I think this article is incorrect.

As I read it in the japanese news this week, Kosei nenkin will not be scrapped. It is kosei nenkin kikin that will be scrapped.

5 ( +5 / -0 )

A very big question is what will happen with the funds that have already been taken by the government from workers? This article shed no light on that point. Is this an Argentine-esque pension confiscation?

1 ( +1 / -0 )

the only thing we get when I become old will be taken hidoy

0 ( +0 / -0 )

Could it be possible that the Japanese Govenrment is (making) a massive capital grab? Considering that the biggest criminal element in Japan today is the governmnet...I would say it is possible. They are socialists, what do you expect? It is just another day for the governmnet.

1 ( +2 / -1 )

I believe Lunchbox is correct ... it is the kosei nenkin kikin that is in danger of being shut down. And if it happens, it won't happen anytime soon. It might take from 10 to 20 years or longer to end it completely.

And in that period of time some genius might figure out a way to save it. But the problem here is, are there any economic geniuses still around? The world sure needs some ...

0 ( +0 / -0 )

tmarieSep. 29, 2012 - 06:08PM JST

Here's an idea, stop giving people a pension if they havent paid anything or very little into it. How many billions of ten have housewives gotten out it when they've contributed nothing?! They get more in pension that single women who have contributed until the age of 60. Unreal.

Or just stop paying pensions to those who have a sizable net worth? The point of social insurance is in case something goes bad, so why keep paying those who don't need it?

-4 ( +1 / -5 )

They said they "Plan" to abolish it. This is how things are done in Japan. Basically.... they come up with an idea and announce it.... if they get very little backlash or disagreement.... they then go ahead with the idea. But I kind of think there will be more than one person against the idea. My money says they don't abolish it but they modify it somehow. This is Japan......

0 ( +0 / -0 )

I worked in Japan for three years and paid into the pension system. After I had returned to the US, I was able to request and receive a refund. I was quick and easy. They seem to prefer that than having to pay a pension. Either way, foreigners in Japan don't lose the money they put into the retirement system.

-3 ( +0 / -3 )

Sorry, but the Japanese have to suffer what 'their' government has screwed. However, being a foreigner over 45 years old and being made to manditorily pay a pension that I could never get has been a burning issue with me for quite a few years. Yeah, I can get the money back after I leave Japan minus a percentage, but this action infuriates me. I have been fighting for years to get out of paying into this BS scheme/scam and now they scrap it? Aaaaargh!!! I want all my money back and I want it now! I advise every foreigner with money in this scheme/scam to get a letter of exemption drafted immediately and send it to the pensions agency. You should also request to have all funds paid reimbursed. If you are in a union grt them yo start pushing to grt your money back. In a country that is 'supposed to be' a world leading economy this is absolutely disgraceful to such a scandalous debacle unfold.

1 ( +2 / -1 )

Residents here do get screwed over cus of corporate company blunders(TEPCO electricity hike), and also Governmental mess ups.

At the best of times, it's met with little more than a sigh and a shoganai.

Japan has a unique culture, as we're led to believe, but not always in a good way.

What happens to people who have been paying into it? Will they receive money back? Hey sure as heck won't receive it all back.

What a sad state of affairs.

0 ( +0 / -0 )

I think many people here are still posting under the assumption that kosei nenkin is being abolished when it isn't. It's the kosei nenkin kikin that's going to be scrapped.

Here's a link to a simple explanation between the two:


0 ( +0 / -0 )

do an assets test to determine getting pension or not

So two people doing the same job with the same income, one person saves hard for a rainy day, the other spends it as fast as it comes in on wine, the opposite sex and song, foreign holidays, fast cars, gambling, whatever. The spendthrift gets a pension and the frugal person doesn't?

many retirees don't need any pension money.

If they've paid in, they should be entitled to their pension.

5 ( +6 / -1 )

AIJ Investment has lost almost 146 billion yen for workers retirement fund and went bankruptcy.

This is a good move by J. Government and there will be many issues that need to be ironed out.

That's one of my reasons why I am strongly against Romney/Ryan's idea on privatization of US SSI and Medicare.

Singapore plan is currently doing okay, but there are too much risks involved.and NO guarantee offered by fund managers. .

0 ( +0 / -0 )

This article isn't exactly accurate: http://hoofin.wordpress.com/2012/09/28/japan-pension-insurance-kosei-nenkin-hoken-is-not-kosei-nenkin-kikin/

0 ( +0 / -0 )

I would like to suggest that all foreign workers in Japan get together somehow and petition the government to give us back our pensioned money which is unreasonably and unjustifiably "robbed" from us. If the government continue to ignore our plight, then we should organize a protest and demonstration to get their attention. Anybody with me?

0 ( +0 / -0 )

lincoln, can you pull all your money you are investing upon leaving Japan? It used to be. It is worth checking first. Please let me know if you are allowed to do so.

0 ( +0 / -0 )

Tom, you get a max of three years back so peopel DO lose money if they stay longer.

Or just stop paying pensions to those who have a sizable net worth? The point of social insurance is in case something goes bad, so why keep paying those who don't need it?

How about leave those people alone with payments then? If I'm not getting anything back, I don't want to pay for it. Those who need it should be working their butts off and contributing to it - and society instead of waiting for a handout they didn't contribute to.

And they need to do away with their system on how to pay it. 50% of those under 35 aren't paying into it. tax ALL salaries over a certain amount and that's the pension payment. No one should be able to "escape" it if it is mandatory but this is Japan. Hell, Koizumi wasn't paying it!!

-2 ( +0 / -2 )

tmarie, I've got all my money back.

Hope you have your Nenkin number with you. Please contact your local Kosei Nenkin office to get the right answer. Also, I kept all my Japanese tax returns just in case, and I am glad I did as there were earning record disputes.

0 ( +0 / -0 )

Global, thanks for the info!!

0 ( +0 / -0 )

its good and bad If you dont want to have pension, it will be voluntary as it is for non-salaried employees now but, if you do want it, you will need to pay in full and company will not contribute as the y did till now or invest in private pension/ savings solution.

0 ( +0 / -0 )

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