… when I'm sixty-five

Many expats leave Japan after a few years. Others go the whole way and aim to retire here, but what with all the hoo-ha in Japan's pension system, can you be sure you'll have an income once you stop work?

Liberal Democratic Party president Shinzo Abe's very sudden resignation as Prime Minister of Japan astonished just about everyone. ("I've never known anything like it in all my 40 years as a politician," opposition Democratic Party of Japan leader Ichiro Ozawa reportedly said.) The official line was that Abe was so dedicated to the War on Terror - helped along by Japan's refueling of US ships in the Indian Ocean - and so aghast at Ozawa's aversion to the plan (the DPJ leader quite clearly announced his intention to block Abe at every turn) that he felt he simply had to resign. The whispers, however, were that the absolute drubbing the LDP took in last July's elections, as well as the vast array of ministerial scandals the party wallowed in, finally took their toll on the man. More than that, some say, were the howls of anger Abe could no longer ignore: those emanating from a public enraged, in large part, at the government's mishandling of some 50 million private pension records.

Though the problem stretches back decades, and the records aren't exactly "lost" (merely, they "lack identification"), the government's finger-pointing response to the fiasco (brought to light this year by the surely-delighted DPJ) ensured that the powers running Japan for most of the years following World War II - namely, the LDP, and former party president Abe - would get most of the blame. Again, 50 million records - a horrible mistake to make in Japan, a nation with numerous seniors (and seniors-to-be) highly dependant upon the money those lost pension records could help them receive.

The Statistics Handbook of Japan 2007 records Japan's population at 127.77 million people, 20.8 percent of which are over the age of 65 (the highest percentage in the world). Though the nation's declining birth-rate drops the population considerably in the future - about 115 million people by 2030, and about 95 million by 2050; Japan's high life expectancy keeps the number of seniors high, and growing; of those 95 million people estimated to live in Japan in 2050, nearly 40 percent will be over the age of 65.

And, if the statistics hold, a number of those seniors will be foreign.

While the casual stereotype of the "foreigner in Japan" is that of the 20-something English instructor who returns home in 18 months, a growing number of laborers, translators, entrepreneurs and the like have called the nation home for decades, and have no intention of leaving any time soon.

"I've been in Japan for 24 years. I've no idea when I want to retire - I'm 49, so I still have years to go - but yes, I do intend to retire here," said JapanInc Communications CEO Terrie Lloyd. "There's no one particular reason, but I definitely think I will be here."

Though Lloyd, a Tokyo resident and New Zealand native, has a number of reasons as to why he remains ("It's safe, my family is here, I'm in a great location"), some concerns remain. "I'm very worried about the quality of the medical care," he said. "Diseases of the aged, like cancer, I don't think the Japanese medical system does such a good job with." Additionally, Lloyd's own take on the national pension system is less than sanguine. "Don't trust the government," Lloyd said. "You can't vote, why should you? I've been self-employed previously, so I haven't paid that much into the pension system.

"Actually, I think the pension system itself is quite unfair for foreigners," he continued. "Foreigners usually only get back the money from the last three years they paid into the system - which means, even if you've had 10 great money-making years, and then three poor ones, you still only get the money back from those final three years. And the government still keeps the money you've put in the rest of the time! They do it because they can - and also, of course, because they can get billions from taxpayers."

In Japan's pension system, workers under retirement age (now officially 60, but look for that to increase) register at their city office into the national pension system, and pay a monthly sum of money into the system beginning at around age 20. This sum is currently set at ¥14,100, a fee which can be paid at post offices, via account transfer etc. Upon reaching retirement age, the worker, theoretically, receives back a bit of the money they've put into the system over the years. The problem for foreigners - as well as many Japanese - is that if one fails to make 25 years' or more worth of payments ("required by law," for workers in full-time jobs; left up to the individual otherwise), one isn't eligible for the full benefits.

Unfortunately, pension records are also often "mishandled," which is why it's important for workers to keep records in the Pension Handbook the city office gives them. On top of that, payment theft is rampant - several post office clerks were recently accused of accepting pension payments from diligent workers, and then simply embezzling the money. On top of that - and a very big worry for workers nowadays - there's no real guarantee that the money will be waiting for you upon retirement. Fewer workers and more elderly people, as every politician within shouting distance of a TV camera has said, will strain the system, possibly to the point of insolvency.

"The problem shows how poor our government is at implementation," said Gakushuin University Political Science Professor Kentaro Fukumoto. "It's not just about the pension issue, either: poorly constructed apartments, bad loans, AIDS - there are a number of problems stemming from the government's inability to act."

However, Fukumoto said, "I don't think the pension system is in dire trouble right now. I think the system would work much better, though, if elderly people got what they actually paid into the system, rather than getting what younger workers are paying into the system now."

"I think the system itself is fine - the problem is whether we can get back the same amount of money we're paying into it," said Matsushita Electric International Projects staff member Keiko Fujisaki. "Workers worry about being able to get their money back," said Yuko Yoshizawa, a coworker of Fujisaki's. "The government is not so good at taking care of people - there's fraud, bribery. What's worse, no one ever seems to get punished for what they do wrong."

A number of nations (such as Japan and Australia, earlier this year) have signed agreements with Japan making it easier for temporary workers brought in by company transfer to continue paying into their own country's pension system. Foreigner workers living in Japan and paying into the Japanese system for longer than that - but for less than 25 years - can opt to take a lump-sum refund equal to around three-years' worth of pension benefit payments, provided they're leaving the country at the time.

"It's a good system, but as with any pension system anywhere in the world, any money you receive is more or less a supplement," said Hyogo Prefecture teacher and artist Vicki Yoshikawa."It's definitely not something to be relied on as your entire income."

Yoshikawa, whose Japanese husband has paid into the system for decades, said that putting "four sons through braces and college" has left little in investments or savings. Still, after nearly 30 years ("On and off and on again") in Japan, Yoshikawa said she feels comfortable with the prospect of retiring here. "I've been all over," Yoshikawa said. "I'm from America; I've spent the past five years in London. Regardless of the pension, the most important thing for me is where my family ends up. If I didn't have any family here, I'd obviously have less incentive to stay - but I do like Japan. It's a comfortable place, I'm not afraid to be out at night, and if I do have family here, here's where I'll probably end up."

Text: Jeff Lo • Images: KS