Welfare ministry to bring charges against businesses dodging employee pension plan

The Health, Labor and Welfare Ministry has decided to bring charges against business owners who refuse to join the employee pension program and pay insurance premiums — a violation of the Employees’ Pension Insurance Act.
Starting from the current fiscal year, the ministry will file a complaint with police against businesses dodging the mandatory pension program and release their names, ministry officials say.
The ministry will set specific standards, such as the number of times business proprietors reject requests for on-the-spot inspections to confirm pertinent data about joining the pension program, before moving to bring charges against violators.

The number of businesses which have refused to join the employee pension program has totaled around 100,000 in recent years, and the ministry hopes to halve the number within three years, the officials say.
Under the pension program, businesses and other entities with five or more employees must shoulder half of each worker’s pension premiums. The commitment leads financially troubled midsize and small enterprises to dodge contributions in droves, forcing employees at such firms to join the national pension system, which provides lower benefits than the employee pension plan. The ministry hopes to help guarantee employees better treatment through its tougher stand against business operators.

The ministry’s initiative is also intended to minimize criticism against the government for being soft on violators of the pension law at a time when the government of Prime Minister Yoshihiko Noda is trying to raise the consumption tax, a pillar of tax and social security reforms.
The Japan Pension Service (JPS), which is in charge of public pension operations, has visited noncompliant firms and sent them notices urging them to join the program. In some cases it has forced reluctant business owners to join the program.

The JPS needs data about business operators such as employee and remuneration numbers to encourage them to join the program. Some business owners, however, have rejected requests for on-the-spot inspections.
As a result, the number of businesses to have joined the employee pension program in the last five years has averaged less than 3,000 to around 10,000 a year. As of the end of fiscal 2010, 107,935 have yet to join the program.

The Employees’ Pension Insurance Act stipulates a prison term of up to six months or a fine of up to 500,000 yen for any violator of the law, but the law has rarely been applied.
The welfare ministry says it will not file a complaint against businesses which have joined the program but are in arrears with premiums.

The ministry will also conduct a survey on about 1.75 million businesses regarding the program once every four years to check if their payments to employees are appropriate under the program.