Pension Revelation Tip of Iceberg / SIA Survey Suggests Falsification of Pension Premium Records Rampant

By Takashi Koyama and Aki Nakamura, The Yomiuri Shimbun 

September 11, 2008

Japan

The involvement of a Social Insurance Agency official in the falsification of pension records revealed Tuesday by the government is suspected to be just the tip of the iceberg. 

The problems caused by alteration of pension records are likely to grow as more such cases are revealed, which will make it necessary for the government to make a concerted effort to repair the damage done to pensioners. 

Responding to an SIA survey, one employee at the SIA's Kojimachi office in Tokyo said, "I suggested to business owners who had failed to pay social insurance premiums that they cut the base monthly incomes of their employees [so that the companies and their employees could pay less in premiums] or to withdraw from the social insurance scheme." 

Premiums are split equally between employers and employees. 

The official, who worked at the office for two years from 1994, was in charge of collecting pension premiums. 

The latest SIA survey covered 17 cases, including 16 that had been confirmed as falsified by the end of February by a third-party committee set up by the Internal Affairs and Communications Ministry to confirm pension records. Of these, the SIA employee's involvement was confirmed in one case. 

Fabrication of pension records included the recording of employees' base monthly salaries as less than the genuine amount or making companies withdraw from the social insurance scheme even though they were still operating. In many cases this led to cuts--sometimes tens of thousands of yen--in the levels of yearly pension payments for pension holders. 

Employers for their part benefited from a lighter burden of insurance payments. Such fabrication also helped social insurance offices because they could make it appear that their premium collection records had improved by cutting the numbers in arrears. 

However, many cases of falsified records occurred more than 10 years ago, so there are almost no documents available to confirm details and no way of establishing the extent of the problem. Except in the case of the Kojimachi office, those in charge said they did not remember what happened, making it impossible to make progress with the probe. 

An employee at a local SIA office in Chiba Prefecture, who asked not be identified, said: "Similar falsification [as in the Kojimachi office] used to be done from time to time at local offices. There are a lot more cases where this one came from." 

This view is supported by the survey conducted by the third-party committee, which confirmed the number of cases of falsification had more than tripled to 56 in the past six months. It is believed highly likely that more than this number have been receiving less in pension payments than they were due without them knowing their records had been falsified. 

Takao Ozaki, 55, who until two years ago worked at the Shiga Social Insurance Secretariat in Otsu, said, "The heads of social insurance offices took the initiative in raising premium collection rates and issued instructions to those in charge of the records at their offices." 

Such a statement suggests that the SIA was involved in the systematic fabrication of pension premium payment records. 

The government introduced a new policy of notifying employee welfare pension recipients of their monthly base salaries. Such records were used to calculate the amount of premiums to be paid. 

Welfare pension recipients are supposed to confirm the contents of the notice themselves. If their base monthly income decreases in an unusual way despite them continuing to work at the same company, it is likely their premium payment records were fabricated. 

The special notifications sent so far do not carry the base monthly salaries on which their premiums were calculated, meaning it is likely more pensioners will now be able to see for themselves if their records have been fabricated. 

The government also has decided to develop a computer system that can detect irregularities--such as when the benchmark monthly income drops in an unusual way--in all online welfare pension data. 

But only a minority of pensioners store all their payslips, so most will not be in a position to confirm whether their premium payment records were falsified by comparing them with their base monthly salary records. 

There also might be cases in which pensioners cannot confirm their past salary records if the company they worked for has gone out of business. 

Makoto Ihara, a licensed social insurance consultant, pointed out: "There could be cases in which pensioners don't know their past base monthly income. And they could find it difficult to recover such records even if they file a petition with the [third party] committee that is confirming pension records." 

The government can no longer carry out a policy that relies on pensioners making all the effort. Instead, it must be responsible for pinpointing as many cases of fabrication as possible and help repair the damage done to pensioners.

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