Pension Data in Over 1 mil. Cases in Doubt

The Yomiuri Shimbun

October 4, 2008

Japan

The number of corporate employee pension records discovered to have been tampered with by the Social Insurance Agency is expected to greatly increase to more than 1 million as the Health Labor and Welfare Minister Yoichi Masuzoe said Friday the number was likely to be much higher than previously claimed. 

In September, Masuzoe said at least 69,000 pension records amended via the SIA's online pension data system had been tampered with. 

Among reasons for the falsely amended data were attempts to lower company pension contributions so that firms could lower costs and SIA offices could improve collection rates. 

Back in September, Masuzoe explained that the 69,000 cases suspected of having been tampered with among 150 million pension records stored on the SIA's online system all shared the following pattern: 

-- Reductions made to the monthly base income data of employees and the withdrawal of those employees from the social insurance scheme took place on the same day or the following day. (The monthly base income is categorized in 30 levels ranging from 98,000 yen to 620,000 yen.) 

-- The monthly base income of employees was lowered by five or more levels. (A lowering of the income by five levels, reduces monthly premiums by as much as 150,000 yen.) 

-- Data of the monthly base income was altered retroactively to at least six months before an employee withdrew from the insurance scheme. 

However, Masuzoe said during the press conference Friday that the pension records could still have been tampered with even if they had not been amended in all three ways. 

Masuzoe said 156,000 cases showed the first pattern of amendment; 750,000 cases, the second pattern; and 533,000 cases, the third. 

The SIA said that, while it had grasped the number of cases meeting the three conditions, it had not calculated the number of cases that met fewer conditions. 

Simple addition produces a total of 1,439,000 cases. While the number of overlapping cases needs to be removed from this total, the number of altered cases could still be more than 1 million. 

As a new measure, Masuzoe also said the ministry would use its Web site to appeal for information about fabricated records from officials and entrepreneurs. 

Starting from the latter half of this month, SIA officials will visit the homes of about 20,000 pension recipients whose records are highly likely to have been tampered with to confirm the records. 

From April, the ministry also plans to send pension record information outlining current policyholders' monthly base pay so that they can check the figures are correct. 

If the figure for an employee's base pay is lowered, the employer's burden in the form of premiums is also reduced. Some companies facing financial difficulties have used this trick to lower their pension scheme contributions. 

Meanwhile, some SIA officers have actually instructed employers who had not been paying premiums to alter their records, sources said. If companies then start paying the lower premiums, the relevant social insurance office can show improved results in collecting premiums, they said. 

Bottom falls out of SIA figures

The seemingly bottomless extent of the problem started to emerge once Masuzoe announced the number of fabricated pension records was likely to increase greatly, observers said Friday. 

Some specialists had pointed out that the 69,000 cases previously announced by the SIA was only the tip of the iceberg because the combination of factors used to identify them was too strict. 

After such heavy criticism, it is only natural that the SIA will be interpreted to have held back the release of the data until Friday because of the embarrassing nature of it. 

The agency claimed that the data must also include a lot of cases that have not been tampered with. But even so, using the current approach for looking into the records cannot be used to confirm the number of cases of altered records before March 1986--when record management went online. 

In addition, cases involving a lowering of monthly base income by four or fewer levels have not even be included in the total announced. 

So just how many cases are there? The SIA must fulfill its responsibility of providing a clear picture of the whole matter and doing its utmost to help victims, observers said. 

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