TT-534 -- Social insurance and visa controversy, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, September 20, 2009 Issue No. 534


- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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A revision to the immigration law passed in the Diet
earlier this year has caused the Ministry of Justice to
instruct the Immigration Bureau to start checking that
foreigner residents in Japan are enrolled in one of the
nation's health insurance programs. Although not stated
explicitly, the implication is that those without such
enrollment may be denied a visa renewal. This will start
happening from April 1st, 2010 and has a lot of foreigners

The reason for this concern is that although all residents
of Japan, including foreigners, are supposed to be enrolled
in one of the health insurance programs, and indeed,
in one of the overall social insurance programs, the
reality is that many people are not. Most such people are
typically either self-employed, contractors, students,
part-timers, unemployed people between jobs, or housewives
(i.e., all outside the regular employee situation).

We have been following the various media and chat boards
about the topic, and the conversations seem to follow three
main threads: that the Japanese insurance program is
unwanted and unfair to foreigners, that it is
discriminatory vis-a-vis Japanese non-payers, and that come
April 1st, what can people do about it?

We try to answer some of these questions below.

[Continued below...]

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Most of us know the health insurance program through a
collective social insurance package that most private
companies are enrolled in, called Shakai Hoken. This refers
to health (kenko hoken), pension (kosei nenkin),
unemployment (koyo hoken), and nursing (kaigo hoken -- for
those over 40) insurances. Effectively for most of us,
these insurances function as a 16% tax, and result in us
getting that much less in our take-home pay packets every
month. Our employers also pay out the same 16% to the
government as their contribution.

Thus, for those of us on lower-to-medium salaries (say,
JPY300,000 a month), while you may think you're only paying
out 20% or so for your payroll taxes (being 10%-12% average
for national tax and 10% or so for your local inhabitance
tax), in actual fact the real number is more like 38%. If
you're in the higher tax brackets, then this number goes
much higher -- into the 45%+ range.

As many readers will know, there are four main social
insurance programs of which health insurance is part: the
Shakai Hoken program which most private companies are
subscribed to, the Kokumin Hoken program, which is for
people not in regular employment or who are self-employed,
private insurance programs which are run by a few major
Japanese conglomerates, and a government employee program.
For most of us, getting a visa renewal will mean being
enrolled in either the Shakai Hoken or Kokumin Hoken

Come April 1st next year, what can you do if you are not
currently a contributor to social insurance? We contacted
the Immigration Bureau to ask this question, and from what
we can tell, they themselves have not yet settled on a
policy of how to handle non-compliant people. They did say
that they will only be checking for health insurance
certificates, not pension and other insurances. So we
suppose that the simplest answer is to go get yourself
enrolled now in the Kokumin Kenko Hoken program. However,
since there are a number of exemption categories for kenko
hoken (working in a company of less than 5 people, for
example), we suppose it might be possible to present
yourself as being an exempt person, with, we think, some
chance of being able to convince the interviewing officer
that your visa should be renewed.

But is it really worth all the risk and hassle?

So how is it that people have been allowed to get away with
not paying in health and other social welfare taxes until
now? There doesn't seem to be an official reason, however,
we believe it is because the government for the longest
time held that the social insurance package was NOT a tax
but rather a benefit, which is why it has not been
administrated by the National Tax Agency. This duality of
positioning caused the Social Insurance Agency (SIA) to be
run differently, and unlike the Tax Agency, has for many
decades decided for itself whether to make people pay or
not. As we all know, this has changed over the last 5
years, as it came to light that the SIA not only let people
off having to pay, but also themselves lost 50MM or so
contributor records.

It seems that the new government position is that the SIA
once it has been reorganized into a new agency next year,
will function more like the National Tax Agency. Indeed,
we think that within 5-10 years, the two will be merged,
and then the Japanese public will be faced with the reality
that Social Insurance really is a tax, not just a pretend

So you're stuck with having to pay at least something. The
good news is that if you're self-employed, a contractor,
or a student, you can pay directly to the government, and
the rates are not all that unreasonable -- certainly the
overall cost of social insurance is significantly cheaper
than if you're a regular salaryperson. As a general guide:
* Kokumin Nenkin (National Pension) -- JPY14,660/month
* Kokumin Kenko Hoken (National Health Insurance) --
roughly about 9%. Actual premium is based on your previous
year’s taxable income and number of dependents. Annual
premiums range up to JPY530,000/year (JPY44,166/month)
* Kaigo Hoken -- only paid by those over 40. Levied as
portion of previous year's taxable income, up to

Lastly, is the threat of withholding a foreigner's visa
renewal if they don't pay their social insurance fair? Our
guess is that this point may eventually be taken to court
by someone caught by the new rule. It is clear that Social
Insurance is NOT a tax yet, and in June this year the
Nikkei ran an article saying that the Social Insurance
Agency had a contributor compliance rate for Japanese
citizens for National Pension of just 62.1% (no word on the
health rate) -- so obviously there are plenty of Japanese
not paying in to the system. Yet, we don't hear of anyone
being punished for that. In fact, just the opposite, the
Agency allows people who are on low wages to only pay a
portion of their obligations, and so the real non-full
compliance rate for social insurance is just 45.6%!

Bad luck if you're a foreigner... you don't get to choose.


For over 20 years we have watched the good works of The
Japan Helpline, run by Ken Joseph. Always there 24 hours a
day, 365 days a year, they have been there for the
International Community with help ranging from emergency
assistance to help with day to day problems.

Ken regularly copies us on the many appeals they get from
foreigners all over the country, having personal crises and
begging for help. Ken selflessly responds to each person
and works through their problems -- seeing the police,
talking to immigration, landlords, and embassies, arranging
repatriation of coffins and belongings, and much more

It's a thankless task, and recently with the financial
crisis the donations to The Japan Helpline have fallen
dramatically. In times like these when things are tough, we
need The Japan Helpline even more. But they rely 100% on
private donations to keep going.

So we appeal to our readers to join us in being one of
their "One Hundred Club" members. If just 100 people sign
up to give 3,000 yen per month to Ken's team, they will be
able to cover their costs.

To donate:
Your support keeps The Japan Helpline going.

...The information janitors/


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+++ NEWS

- Carlyle consortium buys major office building
- Number of centenarians jumps 10%
- Chinese firm buys photovoltaic maker
- Solar-powered apartments

-> Carlyle consortium buys major office building

The commercial real estate market appears to be suffering
a crisis, with buildings that are providing perfectly good
yields being placed on the market at large discounts due
to their owners being over-leveraged. As a result,
commercial property prices fell 8.9% in Tokyo last year.
One such case is the 10-story KDX Toyosu Grandsquare in
Shiodome, which has just been purchased by U.S. fund
Carlyle in collaboration with the South Korean National
Pension Service fund. The large 50,000 sq. m. building is
believed to have been sold for JPY35bn, well below its
normal market value. ***Ed: Realtors fear that another
1.5MM sq. m. of prime new office space coming on the market
over the next 24 months will cause a glut next year and
hurt valuations even further.**
(Source: TT commentary from, Sep 18, 2009)

-> Number of centenarians jumps 10%

They'd better stop being so darned healthy, because the
population of Japanese aged 100 or more rose by a
surprising 10% last year, to 40,399 people. Apparently 87%
of the oldsters are women. Interestingly, Japan does not
top the world for centenarians, that honor goes to the USA,
which has 96,000 really, really old people. (Source: TT
commentary from, Sep 11, 2009)

-> Chinese firm buys photovoltaic maker

Shenyang, China-based power generation systems company,
A-Power, has signed an agreement to purchase 100% of
Kyoto-based thin-film photovoltaic (PV) maker, Evatech,
for US49.9MM in cash. The transaction will close in
November this year. Evatech has developed a low-cost,
high-efficiency thin-film technology to make PV glass
curtain walls. ***Ed: Makes us wonder why they weren't
snapped up by a U.S. or European firm.** (Source: TT
commentary from, Sep 16, 2009)

-> Solar-powered apartments

Sekisui House says it will start selling apartments fitted
with solar cell systems from next month. The firm is
planning to piggyback on changing government legislation,
which will require power companies to pay JPY48 per kW/hr
for sustainable micro power generators (i.e., home-based
solar cell and wind turbine owners) feeding to the national
grid, from November. Right now, the utilities pay just JPY8
per kW/hr. According to Sekisui, the new power systems will
add about JPY5.6MM to the price of a typical four-room
apartment, but amortized, this works out to just
JPY5,000/month. (Source: TT commentary from,
Sep 19, 2009)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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