ISSN 2186 - 0297

Social Security
In
Japan

２０１１

PrefaceThis booklet aims to provide foreign researchers and specialists with an
introductory explanation of aspects of the social security system inJapan: pensions, health care, long-term care, public assistance, family
policy, policy for persons with disability and labor insurance.

Thebooklet was first published in March 2000, and this is the fifth version
updated for 2011.

The booklet is mostly descriptive and kept at aminimum level in outlining the current system and the challenges
facing it.

Those who wish to learn more are advised to refer toweb-sites of related agencies (most notably that of the Ministry of
Health, Labor and Welfare and the Institute of Population and Social
Security Research).

As Japan’s social security system is undergoing aseries of reforms, we will update this publication from time to time.

Shuzo Nishimura PhD.
Director-General
National Institute of Population and Social Security Research

Contents

1.

Overview

2

Pensions

8

Health Care

22

Welfare for the Elderly

34

5.

Public Assistance41

6.

Family Policy and Policy for People with
Disability

46

7.

Labour Insurance

53

For More Information

60

2.

3.

4.

Public of Pension System etc

Public Health Insurance System etc

Long-term care Insurance System etc

Chapter 1
Overview
I. Changes in Japan (Demographic trends such as an aging society with adecreasing birthrate)
Japan achieved rapid economic growth after the World War II to become one of thedeveloped countries in the world. In addition to economic growth, Japan also experienced
various social changes. The most prominent among them is the change in demography. In
particular, Japan’s population steadily had increased from the end of World War II until theearly 21st century but also population aged has been preceded. The declining birthrate has
also led to a decrease in younger population. While the total population of Japan is expected
to begin declining in the future, the trend toward an aging society with a decreasing birthrate
is expected to accelerate (Table 1-1). Furthermore, trends show changes in family composition(increases in nuclear families, households with elderly persons only, single-parent
households), changes in employment structure (increase of employees), women’s social
advancement, and urbanization of population. In light of these changes, social support for theelderly, families, persons with disability, and the unemployed is becoming increasingly
important.

II. History of the social security system in Japan
As with other countries, the source of social security in Japan could be found incharity-oriented communal activities for the poor in a pre-modern era. The period between
the Meiji era (1868-1912) and the World War II saw the implementation of measures to assist
the poor (Indigent Person’s Relief Regulation of 1884, Poor Relief Law of 1929) and theintroduction of social insurance (Health Insurance Act of 1927, National Health Insurance
Act of 1938, Labor Pension Insurance Act of 1941). However, these systems were inadequate
compared to the present system in terms of population coverage and so on.
The social security system in Japan developed dramatically after the end of World War II.
During the social turmoil just after the World War II, measures to assist the needy, to improve
nutrition and to prevent infectious diseases were implemented, along with infrastructuredevelopment related to social welfare policies. In the Constitution of Japan enacted in 1947,
Article 25 stipulates the fundamental principles of developing a social security system, andthis served as the foundation for social security-related laws created in the post war era.
2Social Security in Japan 2011

Table1-1 Population in JapanAll ages

1950

1975

2009

2030

2055

84,115111,940

127,510

115,224

89,930Population

0-14 years old

29,78627,221

17,011

11,1507,516(1,000)15-64 years old

50,16875,807

81,49367,40445,95165 and over

4,155

8,865

29,00536,67036,4630-14 years old

35.4%

24.3%

13.3%

9.7%

8.4%

15-64 years old

59.6%

67.7%

63.9%

58.5%

51.1%

65 and over

4.9%

7.9%

22.8%

31.8%

40.5%

Total Fertility Rate

3.65

1.91

1.37

Age
Structure
Fertility
Life expectancyMale*59.57

71.73

79.59

at birth

Female*62.97

76.89

86.44

Source: Statistics Bureau, Ministry of Home Affairs and Telecommunications, "Population
Census", "Population Estimates", National Institute of Population and Social Security
Research, “Population Projections for Japan: 2006-2055 (December 2006) “, Statistics andInformation Department, Ministry of Health, Labour and Welfare, "Vital Statistics", "Life
Table".
Note: Data with * are those of average from 1950 to 1952.

During the rapid economic growth period that followed, the public pension and healthinsurance was expanded to cover more people, and the so-called “Universal coverage in public
pension and health insurance” extending to all citizens was introduced in 1961. The Act on
Social Welfare Service for Elderly and the Maternal and Child Welfare Act were also enacted,
and benefits from various systems were enhanced. The social security system was reviewed
during the period of stable economic growth since the late 1970s. Meanwhile, developing asocial security system in response to the aging population became an important challenge.
Since the 1990s, measures against the declining birthrate, in addition to the aging
society, surfaced as an important policy issue. Pension and health insurance system reforms
were implemented, and the Long-Term Care Insurance Act was introduced to address theaging society. Enhancement of childcare services and financial support are being promoted toassist child rearing. In addition, due to changes in the employment situation and widening
difference in economy, employment policies have also become important.

3

III. Social security schemes in Japan and its characteristics
1. Types of social security schemes in Japan
A social security scheme is primarily a system that supports the livelihood of the people
by providing necessary support against conditions that lead to poverty, illness, injury, death,aging and unemployment and so on. Social security schemes in Japan include the public
pension system to provide income security for the elderly, the survivors and disabled persons.
Healthcare systems to protect public health include the health insurance, public health andmaternal and child health systems. Meanwhile, social welfare for the elderly include thelong-term care insurance, while family policies include childcare services and financial
support such as child allowance, and support for single-parent households. Policies for
persons with disabilities include the provision of care services and financial support. Public
assistance is available as part of the financial support system for the poor. As part of thesystem to protect workers, employment insurance, work-related accident insurance andothers are available.
Kinds of benefits provided through these social security schemes are either in-kind orin-cash.

Table 1.2 lists major social security schemes by types of benefits and in-kind/in-cashclassification based on International Labour Organization (ILO) classification standard.

2. Social insurance system and Universal coverage in public pension and healthinsurance
Many social security schemes in Japan adopt the social insurance system. There are fivesocial insurance systems, namely the public pension, health insurance, long-term careinsurance, employment insurance, and work-related accident insurance. Of these insurances,
all citizens are enrolled in the public pension and health insurance programs. This universal
coverage in public pension and health insurance is a main characteristic of the Japanesesocial security system. Further, citizens aged 40 and over are covered by the long-term careinsurance, and employees are covered by the employment insurance and work-related
accident insurance.

3. Social insurance premium and tax revenue resources
The social insurance systems mentioned above are financed by social insurance
premiums. The contribution to the schemes is shared by all insured, in most cases, according
to their ability to pay (income). Thus, the function of social insurance is to share the risk
4Social Security in Japan 2011
among insured persons, and at the same time, to redistribute income among them.
On the other hand, other measures, such as public assistance (meaning income
maintenance for the poor, in Japan) and services and benefits for the family and children andthe disabled are mostly paid out of the general budget of the government (tax).

Further, tax

revenue resources are also used to subsidize social insurance systems.

Table 1.2 Schemes of Social Security
SchemePublic pension

Health Insurance
Public healthLong-term care insurance

Finance

Benefit (Main)
In-kindSocial*Insurance
SocialIn-cashMain Type of Function(ILO Standard)
Old Age, Survivors,
Invalidity Benefits*

Sickness and Health*Sickness and Health*

Old Age

Tax*

Old AgeTax**

Family Benefits

Tax

*

*

Invalidity Benefits

Tax

*

*

Insurance
Tax
SocialInsurance

Services for theelderly(except for long-termcare insurance)
Family Policy
Policy for persons withdisabilities
Public assistance

Employment insuranceSocial*Insurance

Work-related accident

Socialinsurance

Insurance**

Social assistanceand others
Unemployment
Family Benefits
Employment Injury

Note: Benefit does not show all kinds of benefits.

4. Administration organizations and Service providers
The Ministry of Health, Labour and Welfare holds jurisdiction over the social security
systems. The Ministry sets national standards and promotes projects deemed necessary to be5

implemented from a national perspective. The Cabinet Office is responsible for theformulation of the government’s basic policies such as measures related to the aging society.
Local governments such as prefectures and municipalities (cities, towns and villages) also
support the social security system. In particular, the municipalities provide public services
related to social security as the local government that is the closest to the residents. Social
welfare offices, child guidance centers and public health centers also serve as administrative
organs under the local government that specialize in social security.

(Reference: Local governments in Japan)
Local governments in Japan include prefectures and municipalities (cities, towns andvillages). The municipalities are basic local government units to provide public services tothe residents. The prefectures provide public services as regional local government units.
Some municipalities, especially the larger ones, are designated cities, core cities, or special
cities, which are partially responsible for the prefecture’s public services.

Service providers of social security, such as hospitals and clinics for the health care,
day-care centers and institutions for the elderly long-term care, rehabilitation centers andsupport centers for the disabled, and so forth, can be both public and private. For example,
there are public hospitals and private hospitals, services of which are both covered by the
public health insurance, and from the view point of the user, there is no difference. Theyboth operate under the supervision of the Ministry of Health, Labour and Welfare (MHLW)
and the local governments.

IV. Revenues and Expenditure of the Social Security
Fig. 1.1 shows a breakdown of social security revenue and expenditure as defined by theInternational Labor Organization (ILO).

Insurance premium accounts for nearly 60% of thetotal revenue and government contributions and others for the rest.

The expenditure for the

public pension takes up more than a half of the entire expenditure, and for the medical care, alittle more than one third. That for the elderly (by target individuals) also takes up around
70 %.

6

9.2

23.5

䂦 14.8

Balance of payments

11.4 [11.2]

Income from capital

Local government

Central government

32.7 [32.2]

48.2

6.6

Administarative cost,
etc.
22.0

Administarative cost,
etc.
22.0

14.9 (15.9)

Welfare and others

29.6 (31.5)

0.5䋨0.6䋩

Public health49.5 (52.7)

Medical care

Pensions

Category

other of w hich long-term
care
6.7

1.0䋨1.0䋩

Gratuties,support

7.3䋨7.7䋩

Family allow ance, social
w elfare, public assistance

Health and medical
services for the aged
10.4

Employment insurance
1.4
Accident compensation
0.9

Pension benefits

Long-term careinsurance

Medical insurance 17.7

85.3 (90.6)

Social insurance

Scheme47.3 (50.2)

6.6䋨7.0䋩

1.0䋨 1.0䋩
0.4䋨 0.4䋩

22.0

Administarative cost,
etc.

Employment injury
Housing

3.0䋨 3.2䋩
Social assistanceand others
2.4䋨 2.5䋩
Unemployment
1.2䋨 1.3䋩

Family benefits
3.2䋨3.4䋩
Invalidity benefits

Survivors

29.1 (30.9)

Sickness and health

Old age

Function

6.8

10.4

48.2

3.7

19.2

22.0

Administarative cost,etc.

Of w hich Chiled,family

Of w hich medical care

Other expenditure
28.7䋨30.5䋩

Welfare services

Medical care

Pension benefits

65.4 (69.5)

Social expenditure
for the elderly

Social security
enpenditure(Unit: Trillion of yen, 㧑)Target individuals

1. “Child, family” refers to medical insurance in the form of a lump sum maternity allowance and child-rearing allowance, employment insurance in the form of parental leaveallowance, day-care facilities administration costs and single parent family and disabled child allowances.
2. “Health and medical care for the aged” by scheme and “Medical care” by target individuals include medical care benefits paid under both the new medical care system forlatter-stage elderly after April 2008 and the past system until March 2008.
3. Fiscal year 2008 Social Security Revenue amounted to 101.5 trillion yen (excluding transfer from other systems). The figure in square brackets [ ] represents the ratio of
the Social Security Revenue total.
4. Fiscal year 2008 Social Security Expenditure amounted to 94.1 trillion yen. The figure in parentheses ( ) represents the ratio of the Social Security Expenditure total.
Source: National Institute of Population and Social Security Research (IPSS), “The Cost of Social Security in Japan 2008”

Notes:

27.3

Contribution from
Employers

General revenue

30.1

Contribution frominsured persons

57.4 [56.6]

Insurance premium

Revenue

Fig. 1.1 Social Security Expenditure by revenue, scheme, category, function and target individuals, fiscal year 2008

Social Security in Japan 2011

7

Chapter 2
Pensions
I. General Characteristics
1. Three-tiers of pension system
The Japanese pension system is multi-tiered, consisting of public and private pension
schemes (Fig.2.1). In this booklet, the distinction between public and private pensions isdefined to be whether the insurer of pensions is the government or not. The first tier is the

Basic Pension (Kiso Nenkin), which provides the flat rate basic pension of a universal
coverage. As a non-income-related pension, it aims to provide a basic income guarantee forthe old age, and the participation is mandatory to all residents.

The second tier, theEmployees’ Pension Insurance (Kose Nenkin Hoken) covers the most of employees and isincome-related in both premium and the benefit structure.

Its provision is mandatory to all

firms over a certain size, and premium is shared by employers and employees.

The first andthe second tier pensions are both operated by the government and thus are public.
The third tier is an optional scheme.

It is provided either by private firms (employers)

for their employees, or by collective national pension funds for the self-employed for which
the government is the insurer.

The Employees’ Pension Funds is operated by employers,

but has a large portion of the Employees’ Pension Insurance and thus has a quasi-publiccharacter.

There are also personal pensions operated by organizations such as private

insurance firms and trust banks, but these are not covered here, as they do not fall under the
category of social security system.
The schemes in the first and the second tiers for employees are jointly operated and asingle contribution rate covers contributions for both schemes.

Thus, in many cases, theterm “Employees’ Pension Insurance” refers to both of them jointly.

The Employees’ Pension

Insurance covers both employees and their spouses (Categories No.2 and No.3 insured. See
Fig 2.1).
Similarly, the Basic Pension for the self-employed, farmers and other non-employed(Category No.1 insured) is called the National Pension (Kokumin Nenkin), which is now
operated by Japan Pension Service under the responsibility of the government. The civil
servants have a separate scheme on their own called Mutual Aid Pensions, which covers boththe Basic Pension portion and the income-related portion.

Thus, the entire adult

population, in principle, is insured either by the Employees’ Pension Insurance, the National
8

Social Security in Japan 2011
Pension or the Mutual Aid Pensions.

2. Universality of the basic pension
The coverage of the Basic Pension is universal, i.e. it is intended to cover all residents 20
years old or above in Japan including foreigners. For the National Pension, the eligibility toreceive pension benefit requires a minimum of 25 years of premium payment, and the
maximum enrollment period is 40 years.

3. Mixture of public and private schemes
The insurer of the National Pension and the Employees’ Pension Insurance is thegovernment. They form the two pillars of Japan’s public pension system.

According to asurvey, more than 60% of the elderly households depend entirely on the public pension
benefits for their income.
Other schemes are occupational pensions.

The Employees’ Pension Funds, the Tax

Qualified Pensions (scheduled for abolishment in 2012), Defined-Benefit Corporate Pension,
Defined Contribution Plan and the Mutual Aid Pensions, the third tier for the Category No.2
insurers (employees), are run by each private firm or the government in the case of the
Mutual Aid Pensions where the government is the employer, and not all of the employees arecovered by them.

The National Pension Funds, which provide the third tier coverage for theCategory 1, are run by local and occupational funds. It is also optional, and only a fractionof the Category 1 is participating.

4. Insurance premium
For the Employee’s Pension Insurance (the public pension for the Category No.2, i.e.
employees), the premium is paid by both employees and employers, and is set at a fixed rateof the salary (see the table on pp. 20-21).

The same rate covers the premium for his/her

spouse who does not make more than ¥1.3 million/year (called the Category No.3). For the

National Pension (the public pension for the Category No.1, the self-employed), the premiumis paid by the insured only, and is a flat rate for all. Both the Category No.1 and his/her
spouse, if he/she is not working as employees, have to pay the premium. The premium for
occupational pensions differs from scheme to scheme, but mostly is paid by the employers for
the Category No.2 and by the insured for the Category No.1.

9

Fig. 2.1 Pension System in Japan
Corporation-BasedDefined Contribution
Pensions(paid by employers)

Individual-BasedDefinedContribution Pensions(paid by individuals)

Max.

Max.

¥68,000 –NPF
premium¥51,000/mo
Max.

Max.
¥25,500/mo
CorporatePensions¥23,000/mo
National

MutualFunds

Pension

Employees’ Pension Insurance

Funds (0.8m)

Basic Pension

Spouses of
employees(No.3)
10million

Self-Employed(No.1)
20 million

Max.
¥,23000/mo

Employees (No.2) 39million

Shaded boxes indicate optional Defined-Contribution
pensions. The amount inside is the maximum premium.

Note: Numbers in ( ) are number of subscribers. No.1, 2, & 3 denotecategories of subscribers: No.1 is for self-employed, farmers, students, etc.,
No.2 is for employees, and No.3 is for spouses of No.2.
(All numbers are as of March 2010)
Source: Web-site of Ministry of Health, Labour and Welfare (MHLW)( http://www.mhlw.go.jp/wp/publish/pdf/p20.pdf in Japanese)

10Social Security in Japan 2011
5. Government subsidy for the public pensions
For the first tier (Basic Pension), one half of the benefits and all of administrative costs
are paid from the general budget of the government.

For the second tier (Employees’

Pension Insurance) and mutual aid association pensions for central and local civil servants,
the administrative costs are paid by the central government. For the third tier, there is no
subsidy from the government.

6. Mixed retirement package
Japanese firms traditionally offered to its employees a retirement allowance in the formof a one-time lump-sum payment.

Since the introduction of public pension schemes, firms

started to offer private pensions to attract employees.

Currently, most firms provide a

mixture of a lump-sum payment and a pension scheme. Since the two types of scheme areinterchangeable in many instances, the entire retirement package is seen as the income
security for the retired.

7. Defined –Benefit vs. Defined-Contribution Pension Schemes
The National Pension, the Employees’ Pension Insurance, and optional National Pension
Funds

and

corporate

pensionsarealldefined-benefit

schemes.

In

2001,

Defined-Contribution pension schemes were introduced. However, the number of schemes
and the enrollment has not increased as much as expected.

The number of enrollment wasaround 3.1 million persons at the end of FY 2008.

11

II. Pension Schemes
1. The National Pension
As described above, all residents in Japan between ages of 20 to 60 are eligible andrequired to become a subscriber of the Basic Pension.

The amount of pension payment

varies depending on the enrollment period and can be calculated as follows.
¥792,100 * ( (insured months + 1/2 * exempt months ) / 480 )Whereas employees automatically enroll in the Basic Pension when they subscribe to the

Employees’ Pension Insurance, the National Pension is for those who are not employees. A
fixed amount (¥15,100 per month in 2010) is levied on each subscriber as a premium. (26%of Category 1 subscribers are fully exempt and 2.6% are partially exempt from premiums)
Current benefits are paid out of currently collected premiums (pay-as-you-go system), but asmuch as one half of the benefits are subsidized from the general budget of the government.
The benefit is flat rate to all, and the scheme is a defined-benefit scheme.

Fig. 2.2 Subscribers of the Basic Pension (FY2009)
Category 3
15%

Category 1
29%

Category 2
56%

Category 1: All residents who are not Category 2 or 3, i.e. self-employed, farmers, students, etc.
Category 2: All employed persons whose workplace has more than 5 employees
Category 3: Non-working spouses of Category 2
Source: Web-site of Ministry of Health, Labour and Welfare (MHLW)(http://www.mhlw.go.jp/topics/bukyoku/nenkin/nenkin/toukei/dl/h21a.pdf in Japanese)

Due to the impact of the recent economic downturn, National Pension is facing an issueof contribution evasion, especially among the younger people. However, with the introductionof a multi-level premium exemption system in 2002, some subscribers can prepare for future
pensions by using a partial waiver program. Meanwhile, average monthly benefit amountfor the old age is about ¥53,900, which is around 82% of the full amount.
becomes more mature, this amount may increase.
12

As the system

Social Security in Japan 2011
2. The Employees’ Pension Insurance
The Employees’ Pension Insurance forms the core of the income security for retirees.
All workplaces with more than 5 employees and their employers are required to participate
in this scheme.

Both employers and employees contribute 7.5%1 of employee’s monthly

salary as premiums (including a premium for the National Basic Pension), and the pension
benefit is income-related.

There is no discount system for low-income persons/household (orhis/her employer), but employers of those who are on maternity leave (up to 1 year) are
exempt from paying premiums2.

Meanwhile, the amount of pension payment is decided asfollows.
Basic Pension + (Monthly income * 0.55% * insured months * slide rate)+ dependants
allowance
That is, the pension amount is decided by the income during the working years(minimum ¥98,000, maximum ¥620,000) and the enrollment period. The average monthly
benefit for the old age is about ¥155,345, which amounts to 49.7% of the average monthly
salary of subscribers (2008).

3. National Pension Fund
The National Pension Fund is an optional pension for the self-employed (Category No.1),
and it is designed to give additional pension coverage to the self-employed who do not havethe third-tier pension (Employees’ Pension Insurance).

However, only about 3% (0.61

million) of Category No.1 subscribers (20 million) are currently subscribing to the Fund.

4. Change of Corporate Pension Schemes
In line with the introduction of international accounting standards in 2000, corporate
pension schemes underwent a major reform.

The Employees’ Pension Fund wasstreamlined, and instead, the Defined-Benefit Corporate Pension (2001) and DefinedContribution Plan (2002) were newly established. The principal reason for the introductionof these schemes was to accurately reflect a firm’s outstanding pension liabilities in thefinancial statements.

The Defined Contribution Plan, in particular, facilitates theportability when changing jobs and responds to changes in the employment situation.

As

1 The premium rate applies to monthly salary and bonus shared equally between employers andemployees.
2 Employees who are on maternity leave typically do not receive salary, except unemployment benefits(40% of their pay), and thus do not need to pay a premium. The duration of maternity leave is counted
as insured months in calculating a benefit level.

13

shown in Fig. 2.3, the number of subscribers to the Defined-Benefit Corporate Pension andDefined Contribution Plan (corporate type) are on the increase, while that of the Employees’
Pension Fund has steadily been decreasing.

Fig. 2.3 The transition of Employee’s Pension Fund,
Defined Benefit and Defined Contribution member
12,000

Employee's Pension Fund
Defined Benefit

T ho usand persons

10,000Defined Contribution

8,000
6,000
4,000
2,000
0
2001

2002

2003

2004

2005

2006

2007

2008

Source: Kigyou Nenkin ni kansuru Siryo(2009)

The defined-contribution (DC) pension schemes have two types: individual-based andcorporation-based.

The individual-based defined-contribution scheme is for self-employedpersons (Category 1 subscribers) and is designed to give optional pension coverage to theself-employed.

It is operated by the National Pension Fund Association, and its premium is

paid by the subscribers themselves. The second type of the defined-contribution pension
schemes, the corporation-based DC pension, is a type of corporate pensions. Corporations
may provide this type of pensions to its employees.

The premium is entirely borne by theemployer.
Firms welcomed the introduction of DC schemes and many corporations have shiftedfrom the Defined-benefit (DB) corporation pension to the DC corporate pension.

This isbecause firms are realizing a huge burden of future pension payments, which is now labeled
as liabilities under the new accounting system. Suffering from low-returns on their funds,
firms are eager to convert their DB pension schemes to DC schemes, in which future
payments are related to the investment performance of funds, as opposed to the current
14Social Security in Japan 2011
system in which future payments are fixed at the beginning.
However, in the UK, there was a noticeable trend to convert to DC schemes in recent
years, by closing the DB plan and provide the DC plan to new subscribers. But because a DB
scheme is of value to the employees and could serve a firm to differentiate itself from others
when hiring new employees, business owners are shifting to a stance to maintain the DB
scheme while also pursuing a more economical approach. As shown in Table 2.1, the DB
and DC schemes both have their advantages and disadvantages, and it is desirable for bothmanagement and labor to consider which to adopt.

Table 2.1 Comparison of Defined-Benefit (DB) and Defined-Contribution (DC) Plan
Characteristics
Defined-Benefit (DB)Plan

Defined-Contribution(DC) Plan

Investment
Choices

Participants have no control
over the investment of pension
money.

Usually participants make theirinvestment decisions

Investment Risk

Participants do not need to bear Participants have to bear all
investment risk.
investment risk.

DB

Investment
Returns

Participants can only collect thebenefits defined in the DB
Participants are entitledformula even if the investment
investment returns.
has favorable returns.

Not Clear

Termination
Portability

Participants leaving their job
forfeit future indexation of
benefits already accrued.

DC

Incentives

Participants have greater
Participants have less incentive
incentive to sustain a high level over their entire life than in the DBDBof effort over the entire career in plan since their DC benefits
order to achieve high careerdepend upon the wage trajectory
end salary.
over their entire life.

Wage-Path Risk

Benefits tied to wage used in
the formula, mostly the final
wage.

Benefits tied to career average
earnings.

Usually offers life annuity withfavorable mortality rates

Most DC plans’ distribution is
lump sum. Participants might faceDB
unfavorable mortality rate whenpurchasing annuity in market due
to adverse selection problem.

Life Annuity

Participants could rollover andkeep investing investment
savings.

Dominant
Plan
DC

Not Clear

Source:Tongxuan (Stella) Yang(2005),"Understanding the Defined Benefit versus Defined Contribution
Choice",Pension Research Council Working Paper, Pension Research Council

15

III. 2004 and 2009 Pension Reform and Current Issues of Pension System
1. Financial crisis of public pension
Aggravated by rapid aging, low rate of economic growth, and near-zero interest rates,
the National Pension and the Employees’ Pension Insurance are facing a difficulty to secure
enough funds to meet the future burden of pension benefits.

Various reforms to restrain thepayments, including cutting back of future benefits, raising of premiums and raising thepensionable age from 60 to 65 (for the Employees’ Pension Insurance) have taken place inorder not to put too much burden on the future generations.
Because the reform in 2004 was such a major one, changes made in 2009 were lesssignificant. Issues related to the three major reforms made in 2004 include, 1) the macro
economy slide (method to reduce the increase rate of pension amounts according to thedecrease in population) was not applied due to the impact of deflation in the Japanese
economy.

Further, due to the financial difficulties, 2) it has become difficult to allocate

public funds to finance 50% of the Basic Pension.

And 3) the collection rate of premiums is

at a historically low level for the National Pension, and some firms that are required toenroll in Employees’ Pension are starting to avoid bearing the contributions.

2. Non-compliance and defaults in the National Pension
As noted before, one of the biggest problems of the National Pension is that there are a
growing number of eligible and required persons who have not paid the premium in full.
According to the survey in 2009, as much as 0.33 million persons have not subscribed to the
National (Basic) Pension at all.

In addition, in 2009, the ratio of monthly premiums

actually paid to fully expected premiums was only 60.0%.

To raise the compliance, thegovernment has put in place a mechanism to exempt paying premiums for low-income
persons. In 2006, the 4-level exemption status was introduced, where previously there were
only two levels.

However, the number of people fully exempt from premium payment

reached 5.21 million and partially exempt was 0.52 million people. Of these people, if we
exclude students (1.65 million people) and the legally exempt such as the disabled (1.14
million people), about 11.9% of persons required to pay a premium are exempt due to reasons
such as income, which is placing a heavy burden on National Pension finances.

Every effort

is being made at central, prefectural, and municipal government levels to decrease thedefault rate. The default and non-compliance of the National Pension is worse in younger
16Social Security in Japan 2011
generations.

3. Financial pressure on firms
At the same time, corporate pension schemes are also facing a number of problems.
The first problem is financial.

Not only did the continuing recession of the Japanese

economy and very low interest rate made it difficult for corporations to keep defined-benefit
corporate pensions, it has also made it difficult for some corporation to keep paying theemployers’ contribution for the Employees’ Pension. It is required by law to participate in
the Employees’ Pension Insurance for firms of certain size and over, but some corporations
have taken a drastic measure to dissolve their Employees’ Pension Insurance and make theiremployees subscribe to the National Pension, which does not require employers to share apart of the premium.

4. Duration of payment of premiums
As mentioned before, the traditional Japanese working pattern of the life-longemployment with a single employer has been gradually diminishing.

Many people now

switch jobs and their pension status; thus, change over the life-course. The pattern is moreevident among women who tend to leave and re-enter labor force during raising children.
Thus, it is becoming increasing harder to put in the required payment period for pension
premiums.

For the National Pension, to get the full benefit, one has to have paid thepremium for 40 years, and the Employees’ Pension Funds also have, albeit shorter, requiredpremium paying period.

Many people, especially women, are unable to put in the required

duration, and do not quality to get the full amount. The same problem is also applicable toforeigners who stay and work in Japan for only a limited number of years, and for Japanese
who spend some years abroad.
In response to this situation, Japan has concluded social security agreements with othercountries with an aim to resolve issues related to dual-enrollment in social security systems
and international calculation method of pension enrollment period.

Currently, Japan has

signed the social security agreement with 13 countries including Germany, U.K., and U.S.A,
and is under negotiation or preparing to begin negotiation with 6 countries such as
Switzerland and Hungary. This number of countries entering the agreement is expected toincrease in line with developments in the economy, globalization and implementation ofsocial security systems in developing countries.
17

Table 2.2 Status of agreements with other countries

Implemented

Germany, U.K., Korea, U.S.A., Belgium, France,
Canada, Australia, Netherland, Czech Republic

Signed （Under preparation
for implementation）

Spain, Italia, Ireland

Under negotiation

Swiss, Republic of Hungary

Under preparation for
negotiation

Sweden, Luxemburg, Brazil, Philippine

Source: http://www.sia.go.jp/seido/kyotei/index.htm (in Japanese)
Note: The link above is from the web-site of Social Insurance Agency (SIA). The SIA has beenabolished. But, we can still access the web-site at the March 2011.

5. Accommodating various employment arrangements and life-styles
There has been a big shift of employment arrangements from full-time to part-time,
especially among women workers.

However, the Employees’ Pension does not include

part-time workers, and many women adjust their working style in order to remain as
Category No.3 (dependent spouse of subscribers of Employees’ Pension). The 2004 Reform
did not actually implement measures to correct this, but it has mandated the government toreview and take necessary action within 5 years.
The 2004 Reform implemented the following changes to accommodate the changing
life-styles: 1) extending the period of premium exemption for those taking maternity or
paternity leave from 1 year to 3 years, 2) making it possible to divide the pension benefit of
the Employees’ Pension between husband and wife if they divorce, and 3) putting a time
limit of 5 years for survivor’s pension benefit for widows (widowers) younger than 30 years
old and with no children.
Currently, 83.9% of all Japanese firms offer retirement packages for their employees.

Aretirement package can be either a one-time lump-sum retirement allowance, or a life-long or
limited duration pension, or both. The breakdown shows 26.8% of firms combine lump-sum
payment and pension, 10.7% offer pension only, and 46.4% offer lump-sum payment only.
Even though the pension is gradually spreading its share, the traditional style of thelump-sum allowance is still the main stream and most employees choose to take a part or the18

Social Security in Japan 2011
entire amount of the retirement money as the lump-sum payment.

In any case, it will be

important for the private and public sectors to work together to offer pension and retirement
benefit schemes that respond to increasingly diverse lifestyles.

19Outline of the public pension system in Japan
Public Pension
Note

Type of Insurance

Basic Pension

Employees' Pension
Insurnace

Basic

Supplemental

1st Tier

2nd Tier

Mandatory

Mandatory

Government

Government

All residents(categories 1-3)

Category 2 private-sector
workers under 65 whowork at workplaces withmore than 5 employees

64.89
97%
24.11
37%

34.44
51%
23.65
69%

Flat rate

Fixed % of salary

-None

7.50%
7.50%

⑤

\14,410 (for Category 1 & 2),\0 (Cat.3)(including premium for
National Pension)⑥

Not Available¥312,813
ExemptExempt% of subscribers exempt from paying premium

ExemptExempt
5.7%

Default rate (as % of expected premium)

37.9%

1.3%(2008)

Benefit (Old Age) Type

Flat rate

Income-related\792,100 * ((insured
months + 1/2 * exempt
months)/480)(Monthly income * 0.55% *insured months * sliderate)+ dependants
allowance

Insurer

Eligible persons①

Number of subscribers (millions)

②
②/pop

% to all residents(20-59years)

Number of current pension recipients% to all subscribers③③/②

Premium Type
Average contribution (% to total salary) Employee
Employer
Average contribtion (\)

Average monthly salary of subscribers
Tax exemption

Employee
Employer

Calculation method
Average monthly benefits
Replacement ratio (average)
Starting age
Benefits (Disability)

Calculation method

Average monthly benefits
Benefits (Widow/Widower)

⑦
⑦/⑥
years

¥53,93665¥155,345
49.7%
65

Flat rate

Income-related\990,100 (1st degree) or\792,100 (2nd degree) +dependents allowance

1st degree old age
pension * 1.25 +dependents allowance,
2nd degree: old age
pension + dependents
allowance, 3rd degree: oldage pension¥73,882¥105,703

Not available

Flat rate

Income-related

Calculation method\792,100+ children
allowance for wives
w/children

3/4 of old age pension for
spouse or close family

Avg monthly benefits¥55,442¥88,874

Source:Kigyo Nenkin ni Kansuru Siryo (2009), Web-site of Ministry of Health, Labour and Welfare (MHLW)
http://w w w .mhlw .go.jp/topics/bukyoku/nenkin/nenkin/toukei/nenpou/2008/toukei-list.html

200%Social Security in Japan 2011

(All numbers are as of 2008, unless otherw ise noted)

Semi-Private Pension
Mutual Aid Pension

Employees' Pension
Funds

National Pension
Funds

Supplemental

Supplemental

Supplemental

1/2/3 Tier Combined

3rd Tier

Mandatory

3rd Tier

Optional
Employers of more than 500
Mutual Aid Associations
employees

Government

National and local civil
servants, teachers, etc.

Employees of above

Category 1

4.48
7%
3.92
88%

4.39
6%
2.44
56%

0.61
1%
0.42
69%

Fixed % of salary

Fixed % of salary

Subscriber's choice

6.04～7.754%
6.04～7.754%

1.2 ～ 2.5%
1.2 ～ 2.5%

-None(including premium for
National Pension)

Optional\5,500～\16,910
Not Available

ExemptExemptExemptExemptExempt up to \ 68,000

Income-related

Income-related

Premium-related(Monthly income *0.55% * insured
months* slide rate)+
dependants allowance

Average monthly salaryduring insured months *fixed rate + alphaDepending on premium& age at the time of entry0%
7.1%(2008)\229,000(2005)
65¥39,017
Not available

Not available

65

65

Income-related
1st degree old age
pension * 1.25 +dependents allowance,
2nd degree: old age
pension + dependents
allowance, 3rd degree:
old age pension

Income-related
3/4 of old age pension
for spouse or closefamily21

Chapter 3
Health CareI. General Characteristics of Health Insurance
1. Public health insurance system
Japan’s medical services are financed through a public mandatory health insurance
system, which is composed of three types of schemes: occupation-based and region-based for
those who are below 75 years old, and the separate health insurance for the persons 75 years
old and over. Employers and employees who are below 75 years old and work at firms of acertain size and over should form a health insurance society and thus these are called theSociety-managed Health Insurance.

For those who work at smaller firms, the Japan

Health Insurance Association, which is the public association for the health insurance
provides a collective health insurance, which is called the Association-managed Health

Insurance. In addition, special professions such as civil servants, private school teachersand employees, day laborers and seamen form separate nation-wide professional
associations.

These occupation-based public health insurances cover employees and theirdependents.

Those who are not covered by the Health Insurance should to participate in aregion-based health insurance. This is the National Health Insurance. The municipalities
are the insurers of the National Health Insurance. The elderly aged 75 or over enroll in the

Medical Care System for Elderly in the Latter Stage of Life. The poor households areguaranteed access to medical services without having to pay individual premiums, based on
the public assistance system.
These public health insurances provide nearly universal coverage over the population.
The ratio of each system is shown in Fig. 3.1. The National Health Insurance and the

Association-managed Health Insurance each account for about 30%, the Society-managed
Health Insurance accounts for about 25%, and the Medical Care System for Elderly in the
Latter Stage of Life is about 10%.

2. Financing of health insurance
The public health insurance schemes are financed by premiums, subsidy from thegeneral budget of the government, and co-payment from patients.

Some insurance schemes

have income from inter-insurance program fiscal transfer. For the Health Insurance, thepremium is a fixed percent of employee’s salary, which is shared equally by the employers
22Social Security in Japan 2011
and the employees. The lower and upper limits of the premium are 30/1000 and 120/1000,
respectively. The premiums for the insured members of the Japan Health Insurance
Association and health insurance societies are decided within this range. For the National

Health Insurance, the premium differs among insurers and is usually levied on the basis ofincome, property, and number of insured within a household.

For all Japanese medical

insurance systems combined, the contribution by government subsidy, insurance premiums,
and patient co-payment in 2007 were 36.7%, 49.2%, 14.1%, respectively (See Fig. 3.2 on nextpage).

Fig 3.1 Insured Population by the Health Insurance System(Thousands, As of March 2009)
Others(Social
Assistance)
1,660, 1.3%

Medical Care System
for Elderly in the
Latter Stage of Life,
13,460, 10.5%

Association-Mnaged
Health Insurance,
34,71027.0%

National Health
Insurance Society,
3,520, 2.7%

National Health
Insurance(Municipality
Managed)35,970, 27.9%

Mutual Aid
Association, 9,020
7.0%

National
HealthInsurance
39,490Total
128,730
thousands

HealthInsurance
74,210Society-Managed
Health Insurance,
30,34023.6%

Note1) Preliminary f igures are used f or thenumber subscribers of Japan Health
Insurance Association, Associationmanaged Health Insurance, and daylaborers’ insurance.
2) The total and the sum of
categories may not match due torounding of f of numbers.
3) The total is an aggregate of f igures
and may be dif f erent f rom the actual
total population or number of people
covered by medical insurance.

Seamen's Insurance,
140
0.1%

Source: Web-site of Ministry of Health, Labour and Welfare (MHLW)(http://www.mhlw.go.jp/bunya/iryouhoken/iryouhoken01/01.html)

3. Freedom of choice
Medical examination at most medical institutions is covered by the public healthcare
system if people enroll in a public medical insurance or if they are receiving medical aid
through the public assistance system. In addition, healthcare providers cannot refuse
treatment to a patient without reasonable cause. The General Practitioner (GP) system is23not being implemented in Japan. Therefore, a patient can be treated directly at a hospital asan outpatient. This is a characteristic of the Japanese medical care system that is different
from other countries.

Fig 3.2 The Structure of the health Expenditure in Japan (FY2007)

Source: Ministry of Health, Labour and Welfare (MHLW) “Annual Health, Labour and Welfare Report”
2008-2009
Note; Data are updated by National Institute of Population and Social Security Research (IPSS).

4. Equal coverage of services at equal price
The coverage of health insurance and the prices of medical services are announced by
the Ministry of Health, Labour and Welfare based on suggestion from the Central Social
Insurance Medical Council, where consultations are held among insurers, healthcare
providers and representatives of public interest. These items are not required by law to bedeliberated or voted on by the Diet. Thus, all insured persons receive the same medical
service at equal price.

The area covered by the insurance is shown in Fig. 3.3.

5. Rising health care cost for the elderly and health insurance
As the aging of the population proceeds, the share of the health care costs for the elderly24Social Security in Japan 2011
in total medical costs has increased. The National Health Insurance has a larger number of
elder subscribers than others.

Fig. 3.3 Medical Services Covered by Health Insurance
Advanced medical research

Advanced medical care
Medical checkup
Cash benefits(sickness andinjury, childbirthallowance, etc..)
Prevention/HealthMaintenance

Medical Services

Hospital facility fee

Special room fee

Meal expense
duringco-payment
hospitalization

Special meals

Massage, acupancture, etc.

Uninsured dental
care, etc.

OthersNon-prescription

High Quality
Environment

Health service facility fordrugs

the elderly, Medical cost

Facility fee

Co-payment
At home medical services

NursingLong-term
medical care

Nursing AttendantsLong-Term Care/Welfare= Medical costs covered by health insurance= Other medical costs

Source: Ministry of Health and Welfare (Present Ministry of Health, Labour and Welfare) “Annual
Reports on Health and Welfare” 2000

This is because, as mentioned earlier, the (Employees’) Health Insurance system covers
individual employees and their dependents, while the National Health Insurance systemcovers all other people. As a result, the latter was more greatly affected by rising medical
costs due to the aging society. Therefore, measures to curb medical costs for the elderly andthe introduction of a scheme to share the burden of medical costs for the elderly with otherpublic medical insurers were sought.
The Health and Medical Services for the Aged was created in 1983. This system aimed toensure that medical costs for the elderly (aged 70 or over and those aged 65-69 who are
bedridden) were shared fairly among insurers. Under this system, medical costs for theelderly were financed by national and local government subsidies (30%) and contributions
from the National Health Insurance and Employees’ Health Insurance (70%), as well as
co-payment by the elderly (fixed amount). The contribution amount was inversely
proportional to the ratio of the insured elderly aged 70 or over. In other words, the systemalleviated the burden of the National Health Insurance that had a high ratio of elderly
insured people. However, the aging of the population continued to accelerate, and medical25

expenses for the elderly did not decline. The contributions made from insurers of theemployees’ health insurance to the Health and Medical Services for the Aged also increased
year by year. Against this backdrop, a reform in the system for the elderly was promoted, andthe Medical Care System for Elderly in the Latter Stage of Life for those aged 75 and over
was launched in 2008. The system required the elderly aged 75 or over to pay a premium anda 10% co-payment rate in principle, but kept the contributions from other insurers at 40%.
The present government is currently studying a new medical system for the elderly, as will
be described below.

II. Health Insurance Schemes
1. (Employees’) Health Insurance (Occupation-based public health insurance)
People covered under this type of insurance are employees and their dependents.

Allemployed persons should to join the association, except those who are employed by private
firms with less than five employees and self-employed.

Depending on the occupation andsize of employers, there exist several programs as described below.
(a)Society-managed Health InsuranceThis scheme is operated by health insurance societies organized by large firms for theiremployees. Sometimes more than one firms form a single society.

Currently, there are

1,497 such societies and 30.34 million individuals are covered by them (as of March 2009).
However, due to bankruptcy of the parent company and the high cost of keeping them,more and more firms are dissolving such associations, and their number has been
declining lately.
(b)

Association-managed Health InsuranceThis is for the employees of small and medium scale firms, which cannot form a healthinsurance society on its own.

The Japan Health Insurance Association provides acollective health insurance for them, with contributions from the employers andemployees.

About 34.71 million individuals are covered by this type of health insurance(as of March 2009). The insurance is managed at the prefectural level.
(c)

Other Occupation-based health insurance

•
•
•
•
26

Seamen’s Insurance
Day-Laborer’s Health Insurance
National Government Employees’ Mutual Aid Association
Local Government Employees’ Mutual Aid Association

Social Security in Japan 2011•

Private School Teachers and Employees’ Mutual Aid Association

The first two are operated by the Government, and the other three, by each mutual-aid
associations.

For those covered by the occupation-based health insurance, the employer withholds thepremium from the employee’s payroll for payment to the insurer. The dependent family
member(s) of the insured person do not pay premiums. The premium rate of association
health insurances varies by prefecture, which is the managing unit.

2. National Health InsuranceThis scheme covers all those who are not covered by the Health Insurance, i.e.
self-employed people, workers engaged in agriculture, forestry and fisheries, workers ofsmall businesses, the unemployed, and pensioners. Currently 35.97 million individuals arecovered by this scheme (as of March 2009). The insurers are municipalities. But, some ofprofessionals such as medical doctors form National Health Insurance Societies on their own.
Retirees who previously subscribed to the Health Insurance are insured under the National

Health Insurance. However, the health care cost for the retirees until the age 65 years old
are financed by the transfer from the Employees’ Health Insurance, i.e. retiree’s former
insurer.
The National Health Insurance is financed by the government subsidy as well as theinsurance premiums collected from its subscribers on household basis. In case the insurance
finances face a deficit, the managing municipality will bear the cost. The premium consists ofa portion based on the income, assets and number of people in the household and a fixedamount per household. The premium amount differs from one municipality to another.
Therefore, there may be two households with the same income, assets and number of people,
but different premiums depending on the municipality they live in. Premiums are partiallywaived for households with no income and assets. Consideration is also underway to shift the
managing entity of the National Health Insurance from the municipalities to extended
associations at the prefectural level.

3. Health Insurance System for the Elderly
As mentioned earlier, the Medical Care System for Elderly in the Latter Stage of Life27

for those aged 75 and older and the Fiscal Equalization System for those aged between 65
and 74 were launched in 2008. The elderly aged 75 and over subscribe to the former system
and must pay premiums. Therefore, those who used to be non-working dependents under theformer system must now newly pay premiums. This premium finances 10% of the medical
costs. Of the remaining 90%, 50% is covered by public expenditures and 40% by contributions
from insurers of other insurance programs. Although the co-payment rate of the patient is10%, the rate is 30% for high-income persons, as mentioned later. The managing entities ofthe system are wide-area cooperatives (the organization established to develop plans for
affairs covering a wide area, and to handle these affairs comprehensively and systematically)at the prefecture level, but the municipalities collect the premiums. Also, in order not to
impose excess contribution burden on financially weak employees’ health insurances, asystem was introduced in 2010 to adjust the support amount according to the difference inthe pay-as-you-go basis of the medical insurance premiums. The Fiscal Equalization System
for those aged between 65 and 74 is a system similar to the Health and Medical Services for
the Aged.

III. Medical Benefits and Co-Payment Rate
The co-payment rate is 30% for public medical insurance systems in Japan, excluding
the elderly and children below school age. Payment is made every time you visit a medical
institution. The co-payment rate for children below school age is 20% (this used to be
children under 3 years old until end March 2010). Some municipalities have adopted original
policies to subsidize the co-payment for children older than the above age.
A 30% rate is applied to the high-income elderly aged between 70 and 74, who earn thesame level of income as the working generation. The statutory rate is 20% for the otherelderly persons in the same age group. However, the co-payment rate is at 10% due to abudgetary measure. Under the Medical Care System for Elderly in the Latter Stage of Life
which is applied to those aged 75 and older, the co-payment rate for those who earn the samelevel of income as the working generation is 30%, but the statutory rate is 10% for otherelderly people.
The high-cost medical care benefit system is applied to all medical insurance systems.
This system aims to hold down the co-payment amount by setting a cap according to age andincome, and the insurer bears the difference between the cap and the payable co-payment
amount. The cap amount is set lower for low-income earners. For example, the monthly cap
28Social Security in Japan 2011
for a low-income earner aged under 70 is ¥35,400, and under the Medical Care System for
Elderly in the Latter Stage of Life, low-income earners only pay up to ¥8,000 for outpatient
treatment and up to ¥24,600 for hospitalization.
In some instances, the elderly must receive medical service and long-term care service
at the same time. Therefore, an upper limit for the aggregate amount of medical andlong-term care services has been set since 2010.

IV. Current Issues and recent reforms of the public health insurance
1. Health Insurance for the elderly and the 2006 Reform
Japan’s public health insurance has been facing with financial crisis.

One of the main

problems is the rising cost for the elderly because of population aging. The share of publichealth expenditure among the total public expenditure has increased from 11.7% in 1980 to
18.1% in 2008 (Fig 3.4).

Fig. 3.4 Share of Public Health Expenditure among Total Public Expenditure
19
18
17
16
15
14
13
12
11
2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1985

1980

10

Source: Ministry of Health, Labour and Welfare (MHLW), “Annual Health, Labour and Welfare Report2009”

Meantime, Japan has been implementing a series of small reforms, keeping the system
mainly intact. The reforms from 2002 to 2006 raised the co-payment rate for both old andyoung generations. For those below 69 year old and who are in the Health Insurance, theco-payment rate was raised from 20 to 30%. As a result, the co-payment rate for all medical
insurance systems was unified at 30%. The premium rate of health insurance was also
29

reformed to be applied to the entire annual salary, including bonuses. For those above 70
years old, and above a certain income criteria, the co-payment rate was raised from 10 to
20% in 2002. The co-payment for the elderly was again raised in 2006 (the co-payment was
raised from 10% to 20% for those aged between 70 and 74 and for those elderly with highincome, to 30%). The co-payment rate for the elderly became a fixed rate in 2001. The
monthly upper limit of co-payment is also raised according to the income of the subscriber.
The 2006 Reform enacted two new schemes both of which started in April 2008. One is
the “Medical Care System for Elderly in the Latter Stage of Life” (Koki Koureisha Iryo Seido).
The other is the Fiscal Equalization System that is applied to those aged between 65 and 74.
The outline of the system is as mentioned above.
Because the Medical Care System for Elderly in the Latter Stage of Life only applies tothose aged 75 or older, there was criticism that it was age discrimination. A new medical
system for the elderly is currently being designed to replace the above system.
Table 3.1 Financial Standing of Health Insurance Schemes (2007)
Government Managed
Health Insurance(Current AssociationManaged Health
Insurance)

Association
Managed Health
Insurance

National Health
Insurance

IncomePremiums
Government Subsidy
Other
Total

62,6778,201
174
71,05260,50248
1,453
62,003

26,63430,29829,48586,417

42,683
17,712

32,838
11,77853,344
17,937

11,0281,020
72,442▲ 1,390

11,441
5,346
61,403600

16,48087,761▲ 1,344

Expenditure
Benefits
Outlay for HI for Elderly
Outlay for HI for
Retirees
Other
Total

Balance
Source: Ministry of Health, Labour and Welfare (MHLW), “Annual Health, Labour andWelfare Report 2010”

2. Reform of medical fee System
Under the current health insurance systems, main payment system is fee-for-service
payments. In this payment system, there is an incentive for medical providers toover-examine and over-prescribe medicine, creating a tendency to higher medical costs.
Meanwhile, there is stronger public demand for higher quality of medical services. Since30

Social Security in Japan 2011
2003, Diagnosis Procedure Combination (DPC) was introduced, which pays a fixed medical
cost per day to acute hospitals, depending on the disease type and extent. Medical practice ismore visible because this scheme requires treatment data to be submitted to the Ministry of
Health, Labour and Welfare, and the information can be utilized as basic data for discussing
improvements in quality.

3. High Default rate of the National Health Insurance
The National Health Insurance is a scheme that provides medical service coverage to allindividuals except for employees. Therefore the subscribers include a relatively larger
number of people with higher income risk or medical payment risk. There is a program topartially reduce the premium for low-income households, but there are thought to behouseholds that are not able to pay even after the reduction. The payment in arrears is
considered to be occurring more in urban areas than in rural areas and among young people
than elderly people.
Children of households with National Health Insurance premium payments in arrears
may not have proper access to medical institutions. Therefore, to ensure access to medical
institutions, an insurance card with a short expiration date is issued to high school or
younger children even if the child’s household is behind in premium payments. This scope of
application was expanded from junior high school or younger children to high school or
younger children on July 1, 2010.

V. Other Programs
Schemes other than the health insurance include the following. Public health centers
are located in prefectures (and large-scale cities) to help prevent diseases and conduct
healthcare activities such as health check-ups and health education. In addition to these
activities, the health centers also promote measures related to maternal and child health(health guidance, health examinations). The municipalities are also responsible for
implementing various policies including those on maternal and child health.
In addition, policies on health promotion, cancer control measures, and intractablediseases control are being promoted. Policies on intractable diseases control include subsidies
for research funds and medical costs to compensate for the patient’s co-payment as part of
the Project on Research on Measures for Intractable Diseases and Project on Research on
Treatment for Specified Diseases.
31

Outline of the Health Insurance System in Japan
Seamens'
Insurance

Health Insurance
1)

Name

2)

Eligible subscriber

3)

Number of subscriber(millions) Dependents
Insurer (number oforganizations)

4)

5)

6)

7)

Premium rate:
Subscriber
Employer
Gov't Subsidy to:Administrative cost
Medical cost
Contribution for the healthcare for elderly
Co-payment:
Subscriber
Dependents
Inpatient meal expense

Associationmanaged Health
Insurance
Employees of
Small-Medium
firms
19.80716.488Society- Health
Insurance
SeamenNational Govt Civil
Servants

15.87114.989

0.063
0.095

1.085
1.342

Japan Health
Insurance
Association

Health Insurance
Associations(1,518)Government

Mutual Aid
associciation of eachministry (21)

4.10%
4.10%

3.242% (avg)
3.999% (avg)

4.55%
4.55%

3.05 ～ 5.00%
3.05 ～ 5.00%

All
13%

All
Fixed amountAll
Fixed amountAll--

16.40%------

Employees ofLarge firms

30%
30%（Children below school age 20％)\260/meal (for low-income family \210/meal for first three months, \160/meal afte

\80,100 (for low-income person \35,400)

Maximum

8)

9)

Allowance:
Childbirth allowance
Funeral expense
Fun.exp. for dependents
Unemployment benefits:

Due to sickness¥350,000¥50,000¥50,000

Due to unemployment

For disasterUp to 3 years

Standard daily
Standard daily remuneration * 2/3 perremuneration * 2/3
dayper day

42 days before birth, 56 days after10) Disaster Relief:
For deathFor death of a family
member¥350,000¥50,000¥50,000

Standard daily
Standard daily remuneration * 2/3 perremuneration * 2/3
dayper day
Up to 18 months

Due to childbirth

National Govt
Employees' Mutual
Aid Association--¥350,000¥50,000¥50,000

Standard daily
remuneration * 2/3
per day
Up to 18 months(except for TB 3 yrs)
Standard daily
remuneration * 2/3
per day

Unemployed days
42 days before birth,
before birth, 56
56 days afterdays after--

50% of avg. salary--

1 month of avg. salary
70% of monthly avg.
salary

--

--

--

--

0.5 to 3 months of
avg. salary, due toseverness

Source: Ministry of Health, Labour and Welfare (MHLW) "Annual Health, Labour and Welfare Report 2009", National Institute ofPopulation and Social Security Research (IPSS) "Shakai Hosho Tokei Nenpo, 2009"32

Social Security in Japan 2011

Local Govt
Employees' Mutual
Aid Association

Private School
Teachers &Employees' MAA

Local Govt Civil
Servants

Private School
Teachers &Employees
0.49
0.365

2.822
3.286
Mutual Aid
associciation of each
local govt (55)

All numbers are as of March 2009 unless otherwise noted.
Medical Care System for
National Health Insurance
Elderly in the Latter Stage ofLife

Self-employed, farmers,etc.

46.881

Municipality(1,804)

3.843

Retired

8.82

National
HealthMunicipality
Insurance(1,788)
Associations
(165)

5.03%
5.03%

3.78%
3.78%

Avg.premium per family \164,100----

All (by local govt)--

Partial
--

All
43%

All
32～55%

All
--

--

--

--

--

--

30% （Children below school age 20％)---r 3 months, or for most low-income family (70～74 years old) \100/meal)¥350,000¥50,000¥50,000¥350,000¥50,000¥50,000

Amount of "Standard Amount of "Standard
daily remuneration * daily remuneration *2/3 per day"
2/3 per day"multiplied by amultiplied by aconstant coefficient constant coefficient
Up to 18 months(except for TB 3 yrs)

Extended associations for the
Medical Care System for
Elderly in the Latter Stage ofLife (managing entities)
10%All
90%（※1）

10%（※2）Same as left
\44,400 （General)\24,600（Low-income
people)\15,000（Very low-income
people)※2

standard amount \350,000
Set according to the law--※1
Public funds approx. 50%
Contributions approx. 40%

Standard not set※2
Co-payment rate is 30% for
those earning the same level
income as the working
generation

Up to 18 months(except for TB 3 yrs)

Amount of "Standard Amount of "Standard
daily remuneration * daily remuneration *2/3 per day"
2/3 per day"multiplied by amultiplied by aconstant coefficient constant coefficient

Elderly aged 75 or over, andpersons aged under 75 with acertain level of disability
13.075Co-payment limit\80,100＋(Medical expenses\267,000) * 1%Standard not set

42 days before birth, 42 days before birth,
56 days after
56 days after
50% of salary

50% of avg.salary

1 month of avg. salary 1 month of avg. salary
70% of monthly
70% of monthly avg.
salarysalary0.5 to 3 months ofsalary, due toseverness

0.5 to 3 months of
avg. salary, due toseverness

-----

33

Chapter 4
Welfare for the Elderly
I. Introduction of the Long-Term Care Insurance
Starting in April 2000, Japan introduced the Long-Term Care Insurance.

The insurance

system covers the long-term care of the elderly, which was previously provided partly throughthe health insurance system and partly by the welfare measures for the elderly.

The maindifferences between the Long-Term Care Insurance and long-term care provided by the priorsystems are shown in Fig. 4.1.

The Long-Term Care Insurance grew out of the recognition

that, due to changes in the society such as weakened community ties, increase in small-sizedfamilies, and increase of working women, financial and psychological burden of family facing
the care for the elderly has become unbearably large.

The Long-Term Care Insurance isdesigned to share the burden of caring for the elderly among all members of the society andlessen the burden of the family.
Fig.4.1 Difference between Former System and Long-term Care Insurance from the User Point of View
Former System

Long-term Care Insurance System(at the time of revision)

1. Apply at the municipal of f ice,municipalities decide the service use.

Users select the type of service and service
provider.

2. Separate applications f or medical careand welf are.

A plan f or using long-term care services (careplan) is made f or comprehensive use of
medical and welf are services.

3. Service provided mainly by municipalities
and public organizations (e.g. social welf arecouncil).

Service provided by various kinds oforganizations including private companies,
agricultural cooperatives, consumers
cooperatives and NPOs.

4. High co-payment burden f or middle- tohigh-income earners and it is not easy touse suervices.

10% co-payment rate regardless of income.

E.g. Head of household is a salaried worker
earning an annual income of 8-million yen,
and aged parent receives monthly pensionof 200,000 yen.
○ Special nursing home f or elderly
190,000 yen/month○ Home help Service 950 yen/hour

E.g. Head of household is a salaried worker
earning an annual income of 8-million yen, andaged parent receives monthly pension of
200,000 yen.
○ Special nursing home f or elderly 50,000
yen/month○ Home help Service 400 yen/30 min-1 hour

Source: Web site of the Ministry of Health, Labour and Welfare(http:// http://www.mhlw.go.jp/topics/kaigo/gaiyo/hoken_06.html in Japanese)In other words, it aims to establish a system that responds to society’s major concern
about aging, and to assure the citizens that they will receive care, if necessary, and be
34

Social Security in Japan 2011
supported by society as a whole.

Furthermore, it is expected to alleviate the financialpressure of ever increasing long-term care cost of an aging society on the health insurance
systems.

II. Long-Term Care Insurance System
1. Insurer
Municipalities and specials wards (hereinafter referred to as simply “municipalities”)
are the insurers, and it has multi-layer support from the national government, prefectures,
medical care insurers, and pension insurers.

2. Insured
The insured persons are those who are aged 65 and over (Category I) and the subscribersof health insurance whose age are 40 to 64 years old (Category II). Currently, about 28.3
million persons are subscribed as Category I and about 42.4 million persons, as Category II(as of the end of FY 2008). The premium is collected through municipality and deductedfrom pensions for the Category I, and through additional premium to be paid to healthinsurance for the Category II.

Premium amount of the Category I is determined by eachmunicipality, and thus differs from a municipality to another.

Premium is income-related,

and there will be measures to moderate the burden for low-income persons.
Those eligible to receive long-term care are all persons in Category I who are certified as
requiring support or nursing care based on the certification of long-term care need by the
Nursing Care Need Evaluation Committee. Meanwhile, for Category II persons, care islimited to those requiring nursing care or support due to age-related diseases (=specified
diseases) such as dementia and cerebrovascular disorder.

3. Service provided
Services provided by the long-term care insurance are mainly divided into two categories,
preventive services and nursing care services, as shown in Fig. 4.2. Preventive services areprovided under a new scheme introduced with the revision of the Long-term Care Insurance
Act in FY2005, which aim to prevent an increase in severity among those certified as
requiring support in daily life (Support Required level 1, 2).
Types of preventive services include nursing care preventive home-visit care, nursing
care preventive commuting rehabilitation service, and nursing care preventive short-term
35

stay at a care facility. Types of nursing care services include in-home services such as
home-visit nursing care and commuting for care, and facility services such as welfare
facilities for the elderly requiring long-term care, health care facilities for the elderly
requiring long-term care, and sanatorium-type care facilities for the elderly requiring care.
Users are free to choose the type of nursing care service or service provider, either publicly or
privately managed.
The revision of the law in FY2005 also newly established the “Community-based careservices” such as small-sized multifunctional in-home care and daily life care in communal
living for elderly with dementia, in order to provide services in the community that is theclosest to those requiring support or nursing care.

4. Source of financing
The cost incurred in the Long-Term Care Insurance is financed by premiums, public
expenditure, and co-payment of users.

Apart from the co-payment of the users, the cost isfinanced 50% by premiums (19% by Category I, 31% by Category II) and 50% by public
expenditure. Within this framework the municipality can determine the rate of premium forthe insured of Category 1. The premium is reviewed once every three years. It is estimatedabout ¥2,900 per month on average (2000-2002). The amount increased to ¥4,160 in
FY2009-2011. For the Category 2 insured the rate will be 1.50% of salary and annual bonus in
the Japan Health Insurance Association and 1.068% in the Society-managed Health
Insurance.

Co-payment for the services is 10% of the cost, plus, for those in a hospital or an

institution, and users also bear food expenses and residence expenses (utilities).

5. Assessment of the care-needs
The users are classified into 7 categories (“Support Required Level 1 and 2” and “Care
Required Level 1 to 5”), depending on the severity of the care need.

The upper limit ofservices provided is determined according to these categories.
The user must be assessed by the municipality into one of the categories before applying
for the services. For example, when a person faces a condition requiring support or care, theperson or a family member must first submit an application for a long-term care requirement
certification to the municipal office. Upon receipt of this application, a municipal investigator
visits the applicant’s home for an interview on the physical/mental state and aspects of daily
life. The computer uses the interview results to generate a preliminary assessment.
36

Others• Allowance for modifying house

Community-based nursing
care prevention services• Nursing care preventive
commutingcare for elderly with dementia• Nursing care preventive smallsized multifunctional in-homecare• Nursing care preventive daily
life care in communal living for
elderly with dementia

Nursing care prevention
services• Nursing care preventive homevisit care
• Nursing care preventive homevisit bathing service• Nursing care preventive homevisit nursing care
• Nursing care preventive homevisit rehabilitation• Nursing care preventive
commuting rehabilitation service• Nursing care preventive
management guidance for inhome care
• Nursing care preventive
commuting care
• Nursing care preventive shortterm stay at a care facility• Nursing care preventive medicalcare service through a short-termstay• Nursing care preventive daily
life care for elderly in specificfacilities• Sales of specific nursing carepreventive welfare instruments• Lending nursing care preventive
welfare instruments

Secondaryinsured(aged 40 to
64)
42.4 million

Approx.
80%

Approx.
20%

SocialInsurance
Medical Fee
Payment

Grant

Lump-sum payment(pooled nationally)

Health careinsurers• Health InsuranceSociety• National Health
Insurance, etc.

Special collection*Premiums for younger
people are borne bybusiness operators andthe National Treasury inthe same ways as forhealth care insurance.

DeductedfrompensionMunicipalities
collectpremiums
fromindividuals* 5% of the public expenditure from the national government is for adjustment and may increase/decrease depending on the number of people aged 75
or older and income distributions of the elderly.
* For benefit costs of facilities, etc. (benefit costs of 3 long-term care insurance facilities long-term care insurance facilities and specific facilities
designated by prefectures), 20% is borne by the national government and 17.5% by prefectures.
* The number of the Primary insured is from “Survey on Long-Term Care Insurance Service (Draft) (April 2008)”* The number of the Secondary insured is based on the report from the medical insurers aimed to fix the amount of nursing care payment by the Social
insurance medial fee payment fund; the figure is monthly average in FY 2006.

Formulation of
long-term careservice plans• Support forsystematicuse of care services

Certification of long-termcare need may be
implemented over wide
areas or entrusted toprefectures

Certification of
long-term care need
• Implemented inmunicipalities

Users' co-payment

Using services

Primary
insured(aged 65
or older)28.3

Premiums

Source: Ministry of Health, Labour and Welfare (MHLW) “Annual Health, Labour and Welfare Report 2008-2009”
Note: Numbers of insured persons are updated with the data at the end of 2008 by National Institute of Population and Social Security Research (IPSS) using the data at the end of 2008. Some parts of the figure design are revised by
IPSS.

In-home Services• Home-visit care (home help
service)• Home-visit bathing service• Home-visit nursing care
• Home-visit rehabilitation• Commuting rehabilitation service(day care)• Management guidance for inhome care
• Commuting for care (day service)• Short-term stay at a care facility(short stay)• Medical care service through ashort-term stay
• Daily life care for elderly in specificfacilities• Sales of specific welfare
instruments• Lending welfare instruments
Facility services• Welfare facilities for the elderly
requiring long-term care (special
nursing home for the elderly)• Health care facilities for the elderly
requiring long-term care (healthservices facility for the aged)• Sanatorium type medical carefacilities for the elderly requiring
care
Community-based care services• Night time home-visit care
• Commuting care for elderly withdementia• Small-sized multifunctional inhome care
• Daily life care in communal living
for elderly with dementia• Community-based daily life carefor elderly in community-based
specific facility• Community-based daily life carefor elderly in welfare facilities for theelderly requiring long-term care
Others• Allowance for modifying house

Ordinary collection

Premiums

Municipalities/
special wards

Premiums of elderly(20%)
Premiums of younger people(30%)

Insured persons
Support formunicipalities
Examination,
payment, etc.

Service providers

National (25% *)Prefectures (12.5% *)Municipalities (12.5%)

Public expenditure(50%)

Prefectures
Federation of National Health Insurance Association

Fig. 4.2 The overview of the Long-term Care InsuranceSocial Security in Japan 201137

This assessment and opinion letter of the primary physician are then reviewed by the
Nursing Care Need Evaluation Committee, comprised of health, medical and welfare experts.
This Committee conducts a secondary assessment and decides the care (support) required
category. The municipality notifies the applicant about the decision. Applicants who are notcertified as requiring nursing care cannot receive services provided by the long-term careinsurance, but are eligible to receive nursing care prevention services under thecommunity-support project promoted by the municipality.

6. Care Management
Once the care (support) required category is decided, the necessity of nursing care andsupport is evaluated (=care management), and a care plan is created, which combines services
within the allowance limit for each category. The creator of the care plan varies depending on
the category. The care plans for those eligible to receive nursing care services and requiring
care level 1 to 5 are created by care managers at in-home nursing care support businesses.
The care plans for those eligible to receive preventive services and requiring support level 1 to
2 are created at regional comprehensive support centers.
The regional comprehensive support center is a scheme created in line with theintroduction of preventive services when the law was revised in 2005. It serves as the centerfor elderly care and is responsible for care management to prevent nursing care, creating careplans to prevent nursing care, providing consultations to the elderly and their family,
protecting elderly rights and early detection of abuse.

III. Current Issues
1. Financial Strain and the Reform FY 2005
Soon after its enactment, it has become evident that the initial financial arrangement
was not enough to meet the cost of the long-term care. The number of care recipients grewfrom 1.49 million (0.52 in institutions and 0.97 at-home care) in September 2000 to 3.29
million (0.78 in institutions and 2.51 at-home care) in April 2005.

The financial outlay grewsteadily from ¥3.6 trillion (2000) to ¥7.1 trillion (2006 estimate). Further, the baby boom
generation will begin to become elderly in 2015.

With such background, the long-term careinsurance was reviewed and several reforms were put in place five years after its enactment.
The major reforms were: 1) In view of the increase of those who require relatively little care
(Level 1 or “support required”), a new program was introduced whose purpose is the38

Social Security in Japan 2011
prevention of future care needs. 2) To balance the benefit payment between at-home andinstitutionalized care, the living expense (meals at institutions, etc.) of care facilities was nolonger covered by the insurance.

At the same time, for those with low-income who can notafford to pay the meal expenses out of pocket, certain measures was put in place. 3) Services
are reorganized as region-based and 4) care management certification process was revised.

2. Response to the rise of insurance premium and the co-payment
Another issue is the amount of premium.

For the insured of the Category I, thepremium is deducted from pensions or collected separately by the municipality, and for theCategory II the premium of the Long-Term Care Insurance will be added on top of the healthinsurance premium.
municipalities.

There is also a considerable variation in the premium among

There has been a considerable out-cry from low-income households who

cannot bear the premium or/and the co-payment, and as a response municipalities set the
maximum of 5 levels of premium structure according to the insured’s income.

The Reform

added another level, so that the premium structure is currently 6 levels.

3. Issues for the next system reform
The long-term care insurance system initially aimed to support the independent living of
the elderly, and even if the elderly entered a state that required nursing care, it aimed todevelop an environment where the elderly could receive treatment in the community withwhich they were familiar. To this end, the 2005 revision in the law establishedcommunity-based care services and regional comprehensive support centers to ensure
enhanced services and coordination at the municipality level.
However, the present situation is far from achieving the target, as many issues remainsuch as elderlies having to enter a care facility even if they requested in-home care due tonon-availability of proper service providers in the familiar community, lack of collaboration
between medical institutions, care facilities and in-home service providers, and insufficientnumber of elderly-friendly housing.
Therefore, the discussions for the next system reform scheduled in 2012 are focusing on
how to establish a “regional comprehensive care system” that can provide seamless services inmedical care, nursing care, prevention, housing and livelihood support in the daily living areaof the elderly.

39IV. Services for the elderly other than the long-term care insurance
The services provided to the elderly are mainly part of the long-term insurance benefits.
However, based on the conventional system, mainly institutional services, based on the Act on
Social Welfare Service for Elderly are still provided. The nursing care homes for the elderly
are admission-type facilities for low-income elderly requiring nursing care. In addition,
Homes for the elderly with a moderate fee provide residence and meal services at low-cost,
and there are also welfare centers for the elderly providing health promotion services.
In recent years, there are more Free-charging homes for the aged run by the private
sector. These facilities are considered as housing facilities rather than social welfare facilities
for the elderly. When using the facilities and the elderly enters a contract with the service
provider and bears the full expense. The in-home service provided by the long-term careinsurance can be used at these facilities.
In regard to the relationship between the long-term care insurance and elderly services
provided by other systems, benefits of the Long-term Care Insurance Act have priority
according the principle of placing priority on insurance. Other systems in this case include thehome help service under the Services and Supports for Persons with Disabilities Act. However,services not covered by the long-term care insurance (e.g. hearing aid, prosthetic hand/leg)are provided to the elderly with disabilities according to the Services and Supports for
Persons with Disabilities Act. With regard to public assistance, for the elderly aged 65 or overon welfare and insured by the long-term care insurance, the benefits of the insurance are
given priority, and the co-payment portion is covered by long-term care assistance provided by
the public assistance system.

40

Social Security in Japan 2011

Chapter 5
Public AssistanceI. General Characteristics
The root of Japan’s public assistance goes back to poor relief before the World War II.
Today’s public assistance has its legal basis on the Revised Public Assistance Law (New)enacted in 1950. The Law stipulates four fundamental principles: (1) public assistance tothe people in need is a responsibility of the state, (2) all citizens1 have a right to claim public
assistance without discrimination of sex, social background and reasons for falling into
hardship, and only the economic condition is the criteria of receiving assistance, (3) the state
guarantees to all citizens a minimum level of healthy and cultural life, and (4) public
assistance is a supplement to all resources available to and the best efforts exerted by theapplicant.
The Public assistance is provided upon a receipt of an application from a household in
need and after a careful examination of the application.

The assistance is calculated bysubtracting the household’s final income from the minimum cost of living (See Fig. 5.1).

Incase the minimum cost of living exceeds the final income, the difference is given as theassistance. The minimum cost of living is calculated from seven categories of expenses:
livelihood, housing, educational, medical, maternity, occupational, and funeral expense.
The calculation of the minimum cost of living takes into consideration the differences inliving costs among different regions of the country, and household members’ age. Allassistance is provided as cash transfers, except a few such as medical costs, which areprovided as in-kind.

1. Means test
The principle (4) of the Public Assistance states that the Public Assistance must be a
supplement to the person’s best efforts and available resources.

In other words, the person

is required to use all available resources, including assets, ability to work, as well as
assistance from those who are required to support the person by law.

Assets such as land,houses and farms must be sold, except in the case where the person is actually living or
utilizing it and the value of the assets is higher when it is utilized than when it is sold.

1 The Public Assistance Law (New) excludes foreigners from this right, but currently, by order, legal
foreigners are given “equal treatment as citizens”. Illegal foreigners are not covered.

41

Household goods such as TV are allowed if the diffusion rate of the goods is more than 70%
in the region.
As for the utilization of the ability, the person will not be able to receive assistance if
he/she is judged as capable to work. If the person has a will and ability to work, but isunable to find work, it is unlikely that he/she would be given assistance.
The civil law states that certain relatives and family members are required to support a
person in need.

Thus, the public assistance is given only after it is judged that this support

is not available. In practice, spouses and parents of a minor (less than 20 years old) havestrong responsibility to support the person.

2. Recipients of Public Assistance from Statistics
In 2009, 1,274 thousand households or 1,764 thousand persons (1.4% of the population)
received some types of public assistance (monthly average).

The share of the population

receiving the assistance had been declining until 1995, but since then there has been acontinuous rise.

Among those receiving the assistance, elderly household make up thelargest share, accounting for 44.2% of all recipient households, and has been increasing forsome years.

The share of the household with a disabled or sick is also large, at 34.2%.

About 7.8% are single-mother households, and the rest, 13.5%, is classified as “other types ofhouseholds”.

The large share of households with the elderly, disabled or sick may be thereason that the most of recipient households (87.0% in 2008) do not have any working
member.
By age, those above 70 years old comprise the largest share (30.1%).
and 69 year olds also consist 22.3% of the recipients.

Those between 60

The elderly in general have highcoverage rate (i.e. % of those who are recipients of the Public Assistance among the general
population of that age group).

About more than 20‰ elderly above 60 years old are therecipients of the assistance, where only about 6.8‰ of the children aged less than 5 and4.1‰ of those aged between 20 to 39 years old were the recipients (Table 5.1). Figures by
duration of receiving the assistance show both short-period and long-period recipients. By
employment status, close to 90% of the households have no working member (Fig. 5.2 and
5.3)

42

of house-by age＋Others*persons

per disabled

if a ppl i ca b leA ddi t i ona l＋＋school)and middle(elementaryby grade

per children

Educa t ion＋

treatmentforrequired

cost

average

M edi ca l＋

* Others include children under age of 3, pregnant women &regionby

Hous i ng

4 House maintenance for electricity, water, etc.
5 Others

sick persons being treated at home requiring special meals.
It em s s een a s One-Ti m e R eq ui rem ent s a nd i s provi ded i n a ddi t i on t o m ont hl y expens e
1 Bed (if not in possession), clothes for new-born, diapers, etc.
2 Expenses for entering school
3 End-of-year expenses

members

holdby numberper person

by region

hous eholdindi vi dua l＋Li vel i hood

Li vel ihood

Fig.5.1 Determination of Monthly Minimum Cost of Living

householdthebyrequiredas

Ot hers

Social Security in Japan 201143

Table 5.1 Break-down by age, Public Assistance
Recipients (2008)
Coverage rate (‰Age
Share (%)
in Assistance)
2.8
6.6
<5
12.7
11.6
6 to 19
8.9
4.1
20 to 39
8.5
8.0
40 to 49
14.8
7.4
50 to 59
22.3
20.1
60 to 69
30.1
22.9
70+
100.0
12.0
Total
Source: Ministry of Health, Labour and Welfare (MHLW) "National Survey on Public
Assistance Recipients"
Note; Data are compiled by National Institute of Population and Social Security Research(IPSS).

Fig 5.2 Break-down by the Duration of Receiving
Public Assistance (2008)
6 months to
1 year3.8%

Less than 6months3.5%

1-3 years
14.2%

More than
10 years
34.6%
3-5 years
14.2%
5-10 years
29.7%

Source: Ministry of Health, Labour and Welfare (MHLW) "National Survey on Public
Assistance Recipients"
Note; Data are compiled by National Institute of Population and Social Security Research(IPSS).

44

Social Security in Japan 2011

Fig.5.3 Working/Non-working Households receiving Public Assitance (2008)
No working
household member,
87.0%
Day-Labore,
1.5%

Household member
working,
2.4%

Household Head
Working,
10.6%

At-homesidejobs,
0.6%

Employee,
7.4%

Others,1.1%

Source; Ministry of Health, Labour and Welfare (MHLW) "Report on Social
Welfare Administration and Services"
Note: Data are compiled by National Institute of Population and Social Security
Research (IPSS). Data are based on the households actually received only.

II. Current Issues -The Reform of the Public AssistanceThe Public Assistance is one of the oldest schemes of social security system in Japan.
The recent upward trend in the number of recipients and expenditure of the Public
Assistance has become controversial and the Public Assistance program has become one of
the main targets for budget restraint in the policy debate. One of the criticisms of the
program was that the benefit level is too high, compared to the income level of people who do
not receive Public Assistance benefits.

For example, the benefit level for single-mothers waspointed out to be higher than many of single-mothers who are “managing on their own”.
While many scholars argue that this is not the problem of the benefit level, per se, and the
problem is the fact that many people do not receive the benefit even though their income
level is so low (i.e. the take-up rate of the program is rather low).

Meantime, thegovernment has demolished the additional benefit which was previously given to
single-mothers and elderly households by March 2007, however, the benefit for
single-mothers has reintroduced in December 2009. Due to the fact that the ruling party
shifted from the Liberal Democratic Party to the Democratic Party in September 2009, thepolicy has changed from the previous party.
After the global monetary crisis in October 2009, the coverage rate of assistance has
been increasing.

The number of households receiving public assistance increased to 1.27

millions in 2009 and recorded the highest since the scheme introduced.
45

Chapter 6
Family Policy and Policy for People with Disability
I. General Characteristics
Japan has faced a rapid aging of the population, which is caused by both a decrease in
the fertility rate and an increase in the life span. In order to stop the trend toward a society
with a few children, it is necessary to create an environment favorable to child rearing.
Japan ratified various international convention related to human rights. The
Convention on the Elimination of All Forms of Discrimination against Women in 1985, andthe Convention on the Rights of the Child, 1994 are ratified. Most recently, the Convention of
Rights of People with Disability are singed in 2007 and on the process of ratification. As amember of international community, Japan improves various social measures.

1. Family Policy in Japan
A criticism against the pronatalist policy during World War II, it has been a taboo to talkabout increasing birthrate as a policy in Japan. But, presently a decrease in the fertility rate
is recognized as one of major social issues that the government to tackle with. The Gender
Equality Bureau of the Cabinet Office is in charge of the family policy together with related
policies run by other ministries. “Work-Life Balance Promotion”, is a key word to improve
individual life style. The major reason behind the rapid fall in the birthrate is the situation
whereby women have to choose between either continuing to work or quitting working andhaving children. The cause of this comes from many problems such as not being able to choose
various working styles, the increase in temporary employees, and long working hours, as thenumber of two-income families is on the increase. Hence, it is very difficult for the Japaneseto achieve the lifestyle and the working style they wish.1(a) Income Support< Universal Child Allowance>
In April 2010, New Act of Child Allowance was enforced. The Child Allowance formally
paid to a household with children up to 12 years old (except for the children graduated fromprimary school) with income tested. But, under the new act, income test was abolished and1

Annual Report on children and child rearing (former title as the society with Declining
Birthrate) 2010, Cabinet Office, Government of Japan46

Social Security in Japan 2011
extended the age up to 15 years old, until the graduation from junior high school, which iscompulsory education in Japan. The amount of allowance is ¥13,000 per child per monthwithout age difference.

Table 6.1 Income Threshold for Child Allowance (2007, Old System)
Number of
Dependents

Threshold for Child
Allowance*

None
1 person
2 persons
3 persons
4 persons
5 personsMore than 6 persons

460
498
536
574
612
650
+38.0/person

Threshold for Child
Allowance (Special
Benefit**)*
532
570
608
646
684
722
+38.0/person* Annual Income of previous year (unit: ¥10,000)**Special Benefit is the benefit for employees whose income exceeded the income threshold in
the left column in this table.

Table 6.2 Number of Child Allowance Recipients and Expenditure (2007, Old System)(2007)
Total(of which SCA)
Employee(of which SCA)
Non-Employee
Public Servants(of which SCA)

Number of
Recipients
9,295,555
96,011
6,187,712
74,6502,300,887
806,956
21,361

Number ofChildren covered

Expenditure (unit:
million yen)

12,979,569
105684
8,588,079
81509
3,220,012
1,171,478
24175

975,143
11,588642,341
8,702
243,698
89,104
2,885

Source: Annual Health, Labour and Welfare Report, Ministry of Health, Welfare, and Labour,2009 Note: The 2007 data are under the state of before introducing universal scheme. The
data under the new act are not available.

<Child Rearing Allowance (for single-parent households)>
Child Rearing Allowance is given to single-parent who are rearing a child 18 year old or
younger (he/she has not yet reached March 31 after his/her 18th birthday), who rearing
children by her or himself and whose earnings for the previous year is less than the threshold.

47

The monthly allowance is ¥41,720 in case of one child, ¥5,000 for the second child, and forthird and subsequent children additional ¥3,000 for each child (2010). Before August 2010,
only single-mother households are eligible for this allowance but now both single-mother andfather can receive the allowances. The income threshold for the Child Rearing Allowance isaccording to the number of children in a household. Also, family member other than parent,
his or her income is taken into the consideration.

<Special Child Rearing Allowance (for parents of children with disability)>
Special Child Rearing Allowance is given to parents who look after their children withdisability at home. The monthly allowance of child under age of 20 is ¥50,750 for first degreeand ¥33,800 for the second degree disability. In addition to it, the Welfare allowance forchildren with heavy disability is given to parents who take care of them at home. The monthly
allowance is ¥14,380. On the other hand, the monthly allowance is ¥26,440 whose child isover 20 years old. The children over 20 years old receive entitlements to the national
disability pension according to their degree of disability. (See the following section of
disability policy.)(b) Service to support Family with children<Child Care Facilities (Day-care centers), etc.)>
Municipal governments are required by the Child Welfare Law to provide day-care
centers for children whose parents are not capable of taking care of them for reasons such as
work, illness, and care of other members of the family. Day-care centers typically provide 8hours of care, but demand to extend the hours has been increasing. The staffing and otherquality measures are tightly regulated by the municipality. Fee for day-care centers differ
from a municipality to another, but is usually set so that it depends on income and number ofchildren of the household.
A long waiting list of Day-care centers is recognized as one of the urgent issues to solveby the government. At the local governments, they introduce new schemes of child day careincluding the support for licensed or certified residential care at home by women with childrearing experience or having a license of career. On the other hand, children of kinder
gardens have decreasing in number rapidly due to fewer children. The government proposed
to integrate kinder gardens to child day-care centers but that have not done it, yet.
Approximately 2.04million children are taken care of at the day-care centers in 2009,48

Social Security in Japan 2011
which is about 31percent of the population under 5 years old in Japan. The Cabinet Office set
a special work force to solve the shortage of day-care service in October 2010. There areapproximately 25 thousand children who are on the waiting list in April 2010 according to thegovernment estimation. The number has been increasing last three years due to economic
recessions in Japan.

< Child Support Center (Children of DV victims and without parents or guardians) >There are increasing number of children suffered from Domestic Violence last decade, in2008 child guidance center of prefectures dealt with 42,664 cases and the center ofmunicipalities also dealt with 53,020 cases according to “Report on Social Welfare
Administration and Services” of the Ministry of Health, Welfare and Labour.
There are 58 facilities of protecting and supporting children in Japan. There areapproximately 1.9 thousands children supported at the facilities in 2007. There are also
approximate 3.8 thousands children are supported at the foster parents in 2008.

2. Policy for people with disability in Japan
Under six welfare acts, including, Public Assistant Act, Child Welfare Act, Act on
Welfare of Physically Disabled Persons, Act on Welfare of Mentally Retarded Persons, Act on
Social Welfare Service for Elderly, Act on Welfare of Mothers with Dependents and Widows,
services are provided to the people with needs of services. In 2005, the Services and Supports
for Persons with Disabilities Act was past the parliament. Based on this act, a new scheme ofservice for three types of disability, including Physical disability, Mental retardation, andMental dieses was introduced in 2006. However, there was a strong resistance to introduce
cost sharing among people with disability and under the new ruling Democratic party, reform
measures are started discussing in 2010.

(a) Income Support
The National Pension includes a scheme for adult with disability. It is called theDisability Basic Pension. The pensioners include those who were born with disability. The
Employee Pension includes a scheme for former employees who became disabled while they
were employed. Under the mutual aid associations, there are similar schemes for former
employees with disability including civil servants both of central and local governments andteachers and employees of private school. Also, under the Workers’ Accident Compensation
49

Insurance, employees can receive pension for the loss of ability due to injury and sickness atwork. There are also similar workers’ accident compensation schemes for civil servants.

Table 6.3 Income support for the People with Disability, 2009
Pensions

National Basic Pension

Employees' Pension InsuranceType

Flat rate

Income-related

Amount¥990,100 (1st degree) or ¥792,100(2nddegree)+dependents
allowance(monthly)

1.25 * Amount of Old Age Pension(1st degree) or 1.00 * Amount of Old
Age Pension

Eligibility

Over 20 years of age, who have paid
2/3 of premium period and those who
are under 20 at the time of becoming
disabled and who have turned 20

For those who have become disabledduring insured months (for thoseunder 300 months of insurance
period, 300 is applied)

Source: Annual report on social security statistics 2009, National Institute of Population andSocial Security Research (IPSS)
Other than public pension benefits, there are allowances paid under the certain
conditions of disability by local authorities. However, the allowance is not universal scheme
but an individual local authority provides it out of its own budgets.

(b) Service to support people with disability
The Services and Supports for Persons with Disabilities Act (SSPDA) enforced in 2006
and reorganized the scheme of service for people including children under 18 years old withdisability. The Act aims three goals. The first is an inclusive policy of three types of disability,
physical, intellectual and mental disability. The second is a reorganization of service
providing schemes which is set the people with disability in center. The third is enforcementof active labor participation of people with disability.
However, in September 2009, the new ruling Democratic Party decided to abolish the
SSPDA and to set a new act which seek more inclusive measures without discrimination. Now,
the committee under the cabinet discusses the reform of the Basic Act for Persons with
Disabilities and proposes and enforces the reform measures by 2013. Meantime, the SSPDA
has been carrying. Under the amendment in 2009, the fee schedule of care service has been
improved. The 10% co-payment scheme introduced by the SSPDA in 2006 has been changed
and the people with low income no longer needed to share the cost.

50Social Security in Japan 2011
Table 6.4 Scheme of service under the Services and Supports
for Persons with Disabilities Act (SSPDA)
Home nursing care(Home help)
Nursing care for theseverely disabled
Support for activities
Comprehensive
supportfortheseverely disabled
Day services
for children
Respite care service
Nursing
care
services

Nursing care

Personal care

Training
services

Assist with bathing, toileting and eating at home
Assist severely disabled persons who require constantnursing care with bathing, toileting and eating at home andalso provide outing assistanceOuting assistance and necessary support to avoid danger
surrounding persons with disabilities who have limitations inmaking personal judgments
Comprehensive program to provide multiple services
including at-home care for persons having substantial needfor nursing care
Training on basic daily activities and orientation to adjust togroup living offered for children with disabilities
Respite care (daytime and nighttime) at facilities withbathing, toileting and eating, in case family caregivers
become ill or unable to provide the necessary nursing care
Daytime assistance for persons who require medical
attention and constant nursing care including functional
training at medical institutions, medical management,
nursing care and personal care
Daytime assistance for persons who require constantnursing care including support with bathing, toileting andeating, and provision of opportunities for creative/
productive activities

Nighttime care at
support facilities forthe disabled (Facility
entrance support)

Nighttime support for persons entering care facilities
including bathing, toileting and eating assistanceCare home service

Nighttime or holiday support at group living residences
including bathing, toileting and eating assistanceIndependence
Training(rehabilitation,
life training)

Training provided for a certain period of time to improvephysical function and daily living abilities so that the person
can achieve an independent daily/social life

daily

Employment shift
supportTraining provided for a certain period of time to enhancenecessary knowledge and skills for employment, offered topersons who wish to be employed in an ordinal corporation

Continuous
Employment Support(Type
A:
Employment, Type B)

Provide work place and necessary training to enhanceknowledge and abilities for persons who have difficulties
working in an ordinal corporation

Group living support(Group homes)

Nighttime or holiday services at group living residences
including consultation and daily support

Transportation
supportAssist disabled persons who have difficulties in transportingthemselves outdoor

Commun Community
activity Facility offering opportunities for creative/productive
itylife support center
activities and promoting social interaction
supportWelfare homes
services
Source: Web-site of Ministry of Health, Welfare and Labour(http://www.mhlw.go.jp/bunya/shougaihoken/service/taikei.html).
51

The residential service regrouped with two types, which is day activities and residential
support. Within the day activities, there are the care benefits, the training benefit, and thecommunity based support programs. (See the Table 6.4)

II. Current Issues
Due to the economic downturn triggered by the Lehman Shock in 2008, many
households have experienced a decline in income. Due to this situation, the need forhousehold members to find employment increased particularly among the younger generation
households, especially the wives. As a result, many mothers are seeking childcare, and there
are more children on waiting lists for a daycare center. In October 2010, the government
launched the Task Force Team for Eliminating Childcare Waiting Lists under the Cabinet
Office, and review is underway by the state and local government to tack the issue together.
Although the issue of how to finance the child allowances that began in April 2010 has
yet to be resolved, the allowance is slated for an increase from the current ¥13,000 to ¥20,000
for children under 3, starting in April 2011. Subsidies for high school tuition also began in
April 2010.
Family policies include those adopted to balance work and family, and policies are being
implemented to promote men to take childcare leave.
The policies related to persons with disability are also going through dramatic changes
under the administration led by the Democratic Party of Japan, beginning with theamendment of the Basic Act for Persons with Disabilities in 2011. Under the Cabinet Office,review has begun for the Act for Comprehensive Welfare for Persons with Disabilities(tentative name) to replace the Services and Supports for Persons with Disabilities Act. In
case for the elderly, the introduction of the long-term care insurance greatly promoted inhome care services from facility centered welfare services. A similar trend is now starting forthe environment surrounding persons with disabilities.

52

Social Security in Japan 2011

Chapter 7
Labour Insurance
I. General Characteristics
Japan uses the term “Labour Insurance” to mean both Employment Insurance andWorkers’ Compensation Insurance. The two insurances are operated under independent
systems, but the government is the insurer and the prefectural labour bureau collects theinsurance premiums for both insurances.

II. Employment Insurance
1. Basic Scheme
Employment Insurance has two functions.

One is to provide employees cash benefit incase he/she loses the job as livelihood support and to promote reemployment. The other is
to support employers to prevent them from laying off their employees. The former is called
the Unemployment Benefits, and the latter consists of two components: Service for
Employment

Stabilization

andServiceforDeveloping

Human

Resources.

The

Unemployment Benefits also include a variety of benefits such as the Job Applicants’
Benefits, Employment Promotion Benefits, the Education and Training Benefits, and theContinuous Employment Benefits.

The entire scheme is shown in Fig. 7.1.

Since April 2010, any employee 1) whose scheduled working hours are 20 hours or more
per week and 2) who is expected to be employed for 31 days or more is considered as insured
under the employment insurance regardless of business size.
The employment insurance is funded by insurance premiums and by public expenditure(tax). The insurance premium is paid in principle by both the employers and employee. The
employment insurance premium rate in Japan is not the so-called experience rating by
individual businesses.

2. The Basic Allowance for the Job ApplicantsThis is the most commonly referred to as the “Unemployment Benefits”. The benefit
period varies by reason for unemployment, insured period, and age of the beneficiary. The
benefit period is basically longer if the insured period is longer.

53

Fig. 7.1 Labor Insurance
Job Applicants' Benefits
Unemployment
Benefits

Basic Allowance
Skill Acquirement Allowance

General Employees
Lodging Allowance
Injury and Sickness
Allowance
Old-Age Employees

Old-Age Job Applicant
BenefitShort-Term Employees

Special One-time Allowance

Daily Labor

Day-Labor Job applicant
Benefits
Employment Promotion
Allowance

Labor
Insurance

Employment Promotion
Benefits

Relocation Expenses
Wide-area Job Seeking
Activities Expenses

Study & Training
Benefits

Education and Training
Benefits
Old-Age Continuous
Employment Benefits

Continuous Employment
Benefits

Child Care Leave Benefits
Family Care Leave Benefits

Two
Unemployment
Insurancerelated Services

Service for Employment
Stabilization
Service for Developing
Human Resources

If unemployment is due to “company bankruptcy” or involuntary retirement such as“termination” or “expiration of contract term” (for “Recipient with Specified Qualification” or“Displaced Worker for Specific Reasons”), the benefit period is basically set longer thanunemployment due to other reasons. In addition, for “Recipient with Specified Qualification”
or “Displaced Worker for Specific Reasons,” the benefit period is set longer with higher age(excluding people aged 60 or older). The Tables 7.1 to 7.3 show the number of days for eachkind of recipient. In case of voluntary retirement, benefits start approximately three months
after unemployment (if the person is still unemployed at that time). The benefit amount is 50
to 80% of the average wage for the six months prior to unemployment (45 to 80% for persons
aged 60 and 64), and the rate is higher if the wage prior to unemployment is lower.
54

Social Security in Japan 2011
Table 7.1 Duration of Basic Allowance (General Enployees)(unit: days)
Years of being
insuredAge ofbeneficialy

Less than 1
year

Less than 30
30 ~ 34

More than 1
year and Less
than 5 years

More than 5
years andLess than 10
years

More than 10
years andLess than 20
years

90

120

180

-

210

240

More than 20
years

90

180

240

270

45 ~ 60

180

240

270

330

60 ~ 64

150

180

210

240

35 ~ 4490

Table 7.2 Duration of Basic Allowance (Involuntary terminated Enployees)(unit: days)
Years of being
insuredAge ofbeneficialy
All

Less than 1
year-

More than 1
year and Less
than 5 years

More than 5
years andLess than 10
years

More than 10
years andLess than 20
years

More than 20
years

120

150

90

Table 7.3 Duration of Basic Allowance (For those difficult to get employed)(unit: days)
Years of being
insuredAge ofbeneficialy
Less than 45
45 ~ 64

Less than 1
year

150

More than 1
year and Less
than 5 years

More than 5
years andLess than 10
years

More than 10
years andLess than 20
years

More than 20
years

300
360

3. Employment Promotion Benefits, Education and Training Benefits
Employment promotion benefits include re-employment allowance and employment
allowance. Those qualified to receive the basic allowance and are successful in finding
employment with a certain benefit period remaining are eligible to receive these benefits.
The education and training benefit is provided to those covered by employment
insurance when they attend and complete education or training designated by the Ministerof Health, Labour and Welfare. It compensates a certain percentage of the education andtraining expenses (up to ¥100,000).

4. Continuous Employment Benefits
The (basic) continuous employment benefit for the elderly is provided to insured persons
aged of 60 to 64 years old who have been covered by the employment insurance for five or55

more years. If a person’s wage drops to less than 75% compared to the wage at age 60, thenup to 15% of the monthly wage is paid. The benefit period is provided up to the 65thbirthday.
The childcare leave benefit is a system for insured persons taking childcare leave to carefor infants under the age of one. They receive benefits equivalent to 50% of the wage before
taking the leave (there is an upper limit), assuming that the person was insured for a certain
period prior to the start of the leave. In the past, part of the benefit was paid six months
after returning to work, but the benefit is currently paid in full during the leave.
The family care benefit, as in the case of the childcare leave benefit, is a system forthose taking a leave to provide nursing care for his/her family to receive benefits equivalent
to 40% of the wage before taking the leave (there is an upper limit).

III. Workers’ Compensation Insurance
Workers’ compensation insurance is a system to provide benefits to compensate forworkers’ injury or sickness while at work or commuting to and from work. It also has projects
to promote the social rehabilitation of the afflicted worker. All employees regardless of
employment pattern or business size are covered by this insurance, which is, in principle,
funded by premiums paid by employers. The premium rate varies greatly by industry as
shown in Table 7.4.

Table 7.4 Premium Rates of Workers' Compensation Insurance by Industry(unit: ‰)Industry
Forestry
Fishery
MiningConstruction
Manufacturing
Transportation
Energy (electricity, gas, water or heat supply)
OthersPremium Rate
60
32 ~ 41
6.5 ~ 87
9 ~ 1033 ~ 265 ~ 17
3.5
3 ~ 50Benefits include medical treatment (compensation) benefit for treatment received at
medical institutions, temporary disability (compensation) benefit to compensate for the wage
during the treatment period, injury and disease (compensation) benefit or physical disability(compensation) benefit for injuries/diseases that are not cured or leave disabilities, and56

Social Security in Japan 2011survivors (compensation) benefit in case a worker dies due to a work-related reason.
The system also has various projects to promote social rehabilitation of the afflicted
worker as well as projects to ensure occupational safety and health.

IV. Current Issues
The percentage of contingent workers such as part-time workers among all workers is on
the increase. This trend is redefining the role of the conventional employment insurance. If
employment insurance benefit were only offered to those who have been continuallyemployed for a long time, contingent workers whose employment period is unstable would
not be covered by the insurance and would not be offered support in case they become
unemployed. Due to the sharp rise in unemployment rate during the worldwide recession
triggered by the Lehman Shock, the applicable requirement for employment insurance,
which used to be one year (of expected employment) was relaxed to 6 months in April 2009,
and 31 days or more in April 20101.
Furthermore, the unemployment rate is higher among the younger generationcompared to the middle-aged people. After the Lehman Shock, the unemployment rate
among persons aged 40 to 54 remains at 3 to 4%, while the rate among the young people (age15 to 24) has hovered at 9 and 10%. In light of this situation, measures to promote
employment for the young people have been launched, such as subsidizing businesses that
employ young people.

1 The trend to extend coverage of social insurance to contingent workers is also seen in thechildcare leave system. Since 2005, the provision of maternity leave became mandatory evenfor fixed-term employers, based on the assumption that the worker is employed for a certain
period.
57

Outline of the Employment Insurance System in Japan
1)

The Insured

Number of the insured
Number of employers
Insurer
Premium rate:
The Insured
Employer6) Gov't Subsidy:
Administrative cost
Benefits paid7) Unemployment Benefits(A) Job Applicants' Benefits① Basic Allowance(a) General Employees

2)
3)
4)
5)

(General )
0.4%
0.7%

37.51 (million)
2.02 (million)
Government(for Agro-Forestry)
0.5%
0.8%

All
13.75% of benefits, none for Employment Continuation benefits (c)Requirements

1）Scheduled weekly working hours are 20 hours or more and 2）is
expected to be employed for 31 days or moreAmount

50 to 80% of previous wage

Duration

See Table 6.1-6.3② Skill Acquirement
Allowance③Lodging Allowance④Injury & Sickness
Allowance(B) Employment Promotion
Benefits（Ｃ） Study & Training Benefits
Requirements
Amount(D) Continuous Employment
Benefits① Old Age Continuous
Employment Benefits
Requirements(1) \500/day for course fee, (2) up to \42,500 of transportation cost
\10,700/moSame as the day rate of the Basic Allowance(1) (Re)employment Allowance: Remaining number of payment days * 3050% * Basic daily allowance(2) Outfit Allowance for Regular Employment (for disabled, etc.), moving
expenses, job seeking expenses
Those who have completed the study & training designated by the Ministerwith more than 3 years of insured period
20% of expense (up to \100,000)

Those aged 60 to 64 year olds who have been insured for at least 5 years,
and whose wage is less than 75% of the wage at 60.

Amount15% of the wage after 60 (in case the current salary is 61-75% of thewage at 60, the rate is reduced gradually)

Duration

Until the 65th birthday (In case re-employed after receiving unemployment
benefits, 2 years if the remaining days of unemployment benefit is morethan 200 days, 1 year, if 100 days.)Benefits
Requirements
AmountDuration③ Family Care Leave
Benefits
Requirements
AmountDuration

58

Those who have taken a child care leave to raise a child of less than 1
year old, and who have worked more than 11 days in a month for morethan 12 months in the past two years
50% of wage before the leave
During the child-leave

Those who has taken a family care leave and who have worked more than
11 days in a month for more than 12 months in the past two years
40% of wage before the leave
Up to 93 days

Social Security in Japan 2011(b) Short-term special
employees

Schemes are as of April 2010.
(c) Continuously Employed Older
Day-Laborers
Persons (Over Age 65)
23 (thousand)(for Construction)
0.5%
0.9%

Left and\48～88/day\48～88/dayAll
1/3 of benefits)

Special One-time
Allowance: 30(40) day
worth of the Basic
Allowanceturning 65, and till after 65, and insured
for 6 months in the year before
termination
50 to 80% of previous wage
For 30 days if the insured period is lessthan 1 year, for 50 days if insured for 1
year or more

Paid 26 days ofpremium in the past 2
months\7,500～\4,100/day

---

---

13～17days--Same as left
Same as left, except (1)

---

---

---

---

-----

---

---

---

59

For More Information (web-sites)
Government and related organizations
Ministry of Health, Labour and Welfare (MHLW)
http://www.mhlw.go.jp/english/index.html
Cabinet Office (Policies on Cohesive Society)http://www8.cao.go.jp/souki/index-eng.html
Statistics Bureau (Ministry of Internal Affairs and Communications)
http://www.stat.go.jp/english/index.htm
Portal Site of Official Statistics of Japan
http://www.e-stat.go.jp/SG1/estat/eStatTopPortalE.do
National Statistics Center

http://www.nstac.go.jp/en/index.html

Japanese Law Translation (Ministry of Justice)
http://www.japaneselawtranslation.go.jp/?re=02

Research Institute (related to MHLW)National Institute of Public Health

http://www.niph.go.jp/English/index.html

National Institute of Infectious Diseases

http://www.nih.go.jp/niid/index-e.html

The Japan Institute for Labour Policy and Training
http://www.jil.go.jp/english/index.html
International Medical Center of Japan

http://www.imcj.go.jp/

National Institute of Health Sciences

http://www.nihs.go.jp/english/index.html

National Institute of Biomedical Innovation

http://www.nibio.go.jp/english/

National Institute of Health and Nutrition
http://www.nih.go.jp/eiken/html/index.html
National Cancer Center, Japan

http://www.ncc.go.jp/index.html

National Rehabilitation Center for Persons with Disabilities
http://www.rehab.go.jp/english/index.html

National Institute of Population and Social Security Research
http://www.ipss.go.jp/index-e.asp

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Periodical Journals (in Japanese)
We publish these journals as below on social security study, social
security systems and its changes in other countries, as well as articles oninternational comparative studies and population study.

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Statistical Reports (in English)
The Cost of Social Security in JapanThe Report provides wide range of statistics and information regarding
social security.

Population Statistics of Japan
This report provides tables and figures of important demographic
indicators from the latest statistics.

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IPSS Web Journal is professional journal of Population Study and Social
Security Study. It covers all aspects of the field of population and social
security study. IPSS Web Journal is available in Portable Document
Format (PDF).

For more information, please visit our web-site
http://www.ipss.go.jp/index-e.asp

Editor
Katsuhisa Kojima: National Institute of Population and Social Security Research
Department of International Research and Cooperation

We invite comments and suggestions to be reflected in future editions of thispublication.

Please send all comments to below or by use the Inquiry / Comment

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please make the addressee the editor above.)

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Social Security in Japan (2011 edition)
PUBLISHED BY NATIONAL INSTITUTE OF POPULATION AND
SOCIAL SECURITY RESEARCH (IPSS)
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ISSN 2186 - 0297

March 2011