The Japanese pensions scandals

Abstract

Japan has for a very long time been fretting over the serious implications of the rapid ageing of its population on the future viability of its pension provisions. It is therefore not surprising to learn that the worry has been compounded by the revelation of very serious scandals relating to both the pension system itself and to how it is operated. One of these scandals was the discovery during the early part of 2004 of the non-payment of mandatory pension premiums by those in the limelight, especially by politicians, some of whom were at the very helm. The second, gripping and leaving the entire nation aghast, was the mishandling by the Social Insurance Agency (SIA) of the documentation on the payment of national pension premiums, an act that in many cases rendered it impossible to trace the identities of those entitled to pension benefits. Indeed, the elections on 29 July 2007, for the Diet (parliament) Upper House and some vacant seats in the Lower House (the more powerful of the two chambers), were fought on precisely that very issue, and the outcome favoured the opposition parties, giving them control of the Upper House for the first time ever. The third concerns the discovery in 2008 of the falsification of pension records by SIA staff, the very people entrusted with the running of the system. As these scandals continue to reverberate, the purpose of this paper is to throw some light on them by revealing their very nature and implications. Before doing so, however, it may prove helpful to provide brief background information on the underlying problems with the Japanese pension system. © 2009 Palgrave Macmillan.