EDITORIAL: Pension priorities

It is important to sort out the problem of bungled pension records. But Japan Pension Service needs to make serious efforts to tackle another important challenge if it is to meet people's expectations.

One year has passed since the entity began operation as the successor to the Social Insurance Agency, which became the target of public fury over the pension fiasco and was disbanded.

In its first year, Japan Pension Service has been preoccupied with cleaning up the pension mess. It has been working to match unaccounted-for premium payment records to the actual payers. There are about 9.8 million cases that have yet to be dealt with.

A political decision will have to be made, sooner or later, on how much more time and money should be spent on this work.

Another equally serious problem for the "kokumin nenkin" national pension system is a growing amount of uncollected premiums. The premium collection ratio fell to 60 percent in fiscal 2009 and is likely to sink further this fiscal year. As for the "kosei nenkin" pension system for corporate employees, the number of companies not enrolled in the plan is growing.

Japan Pension Service has put a priority on dealing with mishandled pension records and assigned many employees responsible for premium collection to the mission.

As a result, time-consuming tasks like seizing assets of people who fail to pay premiums have been neglected, according to Japan Pension Service.

To regain public confidence in the pension system, it is vital to solve the records problem. But the system will eventually become unsustainable if efforts to collect premiums remain insufficient.

Putting pressure on employees to improve their premium collection record, however, will not be enough.

While trying to boost the collection ratio by stepping up efforts to get accurate information about income and other relevant factors, Japan Pension Service should also work with the Ministry of Health, Labor and Welfare to devise a flexible approach to dealing with low-income earners who find it hard to pay the premiums. A way to keep these people from dropping out of the system as "nonpayers" or "nonparticipants" should be found.

It is important, for example, to be flexible, allowing for premium payment exemptions according to the actual situations of people in need.

The monthly premium for the universal national pension program has already surpassed 15,000 yen ($180), putting a heavy financial burden on low-income earners.

By using income information provided by municipal governments, Japan Pension Service advises people who meet a set of conditions to apply for exemption from premium payments. If application requirements by persons seeking exemption are obstacles to the wider use of the program by the needy, a revision to the rule should be considered.

Eventually, social security services should be provided more efficiently under the identification number system the government is working to introduce for integrated social security and tax administration.

Given the expected future increases in the social security burden, including a consumption tax hike, it is all the more important for the government to develop an efficient collection and payout system.

There is also room for reform in the pension plan for corporate employees.

The plan is funded by premiums shared equally by employees and employers, with the uniform ratio of contributions to wages, about 16 percent, applied equally to all companies, large and small.

A measure to ease the pension burden on startups should be considered to promote job creation.

Establishing an effective and efficient premium collection system requires understanding the reality of the task.

The welfare ministry once designed a system while ignoring this reality, and the now-defunct Social Insurance Agency operated the system on its own while covering up what it was doing.

Japan Pension Service has a duty to learn lessons from these mistakes and contribute to the integrated reform of the tax and social security systems by disclosing all information related to its premium collection work and it management

--The Asahi Shimbun, Jan. 10