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Labor ministry to expand pension coverage for part-time workers

The Central Government Building No. 5 in Tokyo's Chiyoda Ward that houses the Health, Labor and Welfare Ministry is seen in this file photo taken on Oct. 14, 2015. (Mainichi)

TOKYO -- The Ministry of Health, Labor and Welfare has decided to expand the coverage of the government pension to more part-time workers so that they will have a better safety net after retirement, according to people familiar with the decision.

The ministry intends to lower the number of employees used as a condition for requiring a company to introduce the pension for its employees. The ministry plans to start discussion on the matter at a meeting of experts on Dec. 18 and submit a relevant bill to the ordinary session of the Diet in 2020.

Under current regulations, employers are required to offer the government-sponsored pension when the company employs at least 501 workers, and to those employees who work at least 20 hours a week and earn 88,000 yen or more a month. Companies with 500 workers or less can join the pension system voluntarily based on an agreement between management and the corresponding union. People who work 30 hours or more per week are covered by the pension in principle regardless of the size of the company. Those not covered join the national pension system, which pays less than the pension for regular employees.

National pension payouts after retirement are about 65,000 yen a month if the recipient has paid the monthly premium of about 16,000 yen for 40 years. The employee's pension payment differs depending on premiums paid corresponding to their income.

In the case of a worker with a monthly salary of 88,000 yen, the monthly premium is about 16,000 yen, and half of that amount is shouldered by their employer. The monthly payment for the recipient is about 500 yen more than that of the national pension per year if they pay the premium for a year, and the recipient gets about 18,000 yen more monthly after retirement than under the national pension system if they pay the premium for 40 years.

Expanding the coverage of the employee pension means that companies must shoulder a greater cost, and employers are reluctant. A survey by the Japan Institute for Labor Policy and Training found that of 2,316 companies with 500 or fewer employees that join the insurance on a voluntary basis, only 5.6 percent offered employee pension coverage to their part-time workers. The figure is 4.7 percent for companies that plan to join the pension system.

However, lowering the income requirement for joining the employee pension system means the recipient would receive more money after retirement for less premium payments, triggering a sense of unfairness. It will also be no easy task to convince employers to get on board with shortening the working hour requirement, as businesses will have to cover a greater cost for less labor. Thus, the discussion at the ministry's expert panel is expected to mainly focus on changing the requirement for the number of employees, instead.

The ministry is considering abolishing the employee-number requirement, as it is not desirable for the pension amount to differ by employer as work styles across companies continue to diversify. But doing so would also stir up strong resistance from small- and medium-sized firms. Efforts to reach a compromise are expected to continue until the end of 2019, when the ministry hopes to finalize the bill on the issue.

(Japanese original by Ryosuke Abe and Ai Yokota, Medical Welfare News Department)

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