Public confidence in pension system shaken anew by latest payment failure

The Yomiuri ShimbunA massive failure to pay pension benefits has come to light again. The Japan Pension Service, among others, bears a heavy responsibility for a failure that has undermined confidence in the public pension system. Measures to prevent the recurrence of a similar failure must be thoroughly worked out.

The Health, Labor and Welfare Ministry has announced it failed to pay add-on benefits, which are added to basic pensions if certain conditions are met, to more than 100,000 pensioners. The nonpayments totaled ¥59.8 billion, the largest amount ever uncovered in one instance. The ministry said it will pay the whole amount via the JPS before the end of November.

Pensioners have not received the benefits due to them. This amounts to a scandal that threatens to shake the very foundation of the public pension system.

The add-on benefit pension system is designed for spouses of beneficiaries of the corporate employees’ pension system and the mutual aid pension program mainly for government employees. The add-on benefit system was established to raise the amount of pension benefits for full-time housewives and so forth.

Those who subscribe to the corporate employees’ pension program or the mutual aid pension program for at least 20 years and have spouses are entitled to receive additional benefits — equivalent to family allowances — if certain requirements are met. If a spouse begins to receive a basic pension when they turn 65, the payment of additional benefits stops, and spouses are entitled to receive add-on benefits instead.

The payment failure began in 1991 when the add-on benefits system was introduced. Those affected have been mainly the spouses of former government employees who are recipients of mutual aid pension benefits. Due to a lack of communication between mutual aid associations, which handle mutual aid pensions, and the JPS, which takes charge of basic pensions, there have been many cases in which couples’ pension information was not shared between the two organizations.

Drastic review crucial

The nonpayments resulted from sloppy data handling practices on both sides, including a deficiency of data provided by mutual aid associations and the JPS’ mishandling of pensioners’ information.

The mutual aid pension was integrated into the corporate employees’ pension in 2015, but the management of pension records remains divided. The JPS has said it will upgrade the information system so that pension records are automatically matched up.

Doing just that is not enough. It should work out drastic reform measures, including consolidating its pension management systems.

In 2007 when the JPS was called the Social Insurance Agency, as many as 50 million pension records were found to be unidentified. Even in 2015 after the inauguration of the JPS, personal information was leaked in large quantities when its computer system was accessed illegally.

The latest failure was revealed in its entirety when the JPS conducted wholesale checks on records dating to the time when the add-on system was introduced, following the discovery by JPS workers of several cases in which add-on benefits were not paid.

The problem had been understood by JPS workers for several years. More than 4,000 people have already died without receiving the add-on benefits due to them. It should be said that the response measure came too late.

The pension system has become complicated due to successive revisions. There is a possibility that pension payment failure will occur again in the future. It is essential to investigate whether there is any institutional factor behind the failures, and not treat them as just mistakes by JPS workers. This matter must be tackled with a sense of crisis to work toward regaining the public’s trust in the pension system.

(From The Yomiuri Shimbun, Sept. 16, 2017)Speech

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