Is the pension waiver for full-time housewives unfair?

March 4th, 2011 by Philip Brasor & Masako Tsubuku

Earlier this week the government announced that it will probably submit a bill to the Diet that will allow full-time housewives who did not pay all their pension premiums in the past to receive benefits if they pay some of their premiums retroactively. Originally, the welfare ministry had issued a directive in January to allow this waiver. That plan came under fire from the opposition Liberal Democratic Party, who said that such a matter should be debated by lawmakers and that the waiver is basically unfair. The ministry subsequently suspended the waiver.

Where the deal goes down

This is what is called a “moral hazard,” a term that is used frequently when Japan’s pension system is discussed. Ever since it was discovered that the government had lost or incorrectly filed thousands of pension payment records, there have been many people in the government who advocate scrapping the complicated premium system. They believe it is better to simply pay pensions out of revenues collected through a higher consumption tax. Others complain that this is morally wrong, not so much because it would punish those who have paid into the system properly all along, but rather because it rewards those who have not paid into the system correctly all along.

The housewife issue is even more convoluted. There are three types of beneficiaries in the Japanese public pension system. Type 1 includes the self-employed, part-time workers and the unemployed, who are required to pay a set premium of ¥15,100 a month on their own. Type 2 includes full-time regular employees of private companies and public organizations, who split contributions to their pensions with their employers. Type 3 includes non-earning spouses of Type 2 beneficiaries (technically, “non-earning” means the spouse does not make more than ¥1.3 million a year). Type 3 do not have to pay premiums but nevertheless receive benefits when they reach a certain age. Spouses of Type 1 beneficiares do not have the same advantage, since they, too, are classified as Type 1 beneficiaries and thus have to pay their own premiums whether they work outside the home or are full-time housewives.

The welfare ministry issued the waiver in January because it was discovered in December 2009 that approximately 1 million housewives over the past decade or more had their beneficiary designation switched from Type 3 to Type 1 after their husbands’ work situation changed because they were laid off or their companies switched them to part-timers or contractors. Consequently, their wives became Type 1, too, and had to start paying premiums on their own. However, many weren’t informed of this change by the relevant government bureaus and thus didn’t know that they had to pay. Since an individual has to pay into the pension system for at least 25 years to receive any benefits, many of these wives were at risk of losing their entire pensions.

The welfare ministry’s original directive let them catch up by paying only two years’ worth, since the law limits retroactive pension payments to two years. The moral hazard, according to the LDP, is that these wives get full benefits even though they didn’t pay their full share. Before the ministry withdrew the waiver about 2,300 housewives had already applied for it. The waiver will now be submitted as a bill to the Diet, with the understanding that the main topic of debate will be how far back the housewives will have to pay to regain their pension benefits. If it’s longer than two years, then the basic pension law will have to be revised.

The moral hazard argument might make sense if you compared the housewives who are the subjects of the waiver to those who were Type 1 all along, since the latter theoretically always paid their own way. However, it makes no sense to compare them to Type 3 housewives, who, after all, have paid absolutely nothing. In the realm of moral hazards, isn’t Type 3 even more unfair? Of course, it is the LDP who is responsible for the pension mess, and the housewives who will have to pay retroactively to regain their benefits would be justified in thinking the LDP betrayed them when they lost their Type 3 status and nobody told them.

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6 Responses

  1. The moral of the story for me, as a woman, is never ever rely on marriage as a lifelong source of income. I truly believe that all married women, and even women with young children, should stay in the workforce, working at a paid job even it it’s for only one day a week. The important thing is to stay in the loop. I’ve never held with this modern idea of women being full-time homemakers and mothers (except in certain special circumstances), and frankly I don’t respect women who do.

    As for trusting the government, well don’t get me started!

  2. Miko – thank you for expressing a basic principle. As a man, I have heard enough women who, once married and out of the workforce, admit how much this life and has spoiled their desire to return to the workforce. You may not agree wit this, but in my mind, married women without children who don’t work and who live off their husbands’ earnings, are no more than prostitutes. And the guys who like this arrangements are no different from buyers of prostitutes. Unless, they agree that all finances are 50/50 split. Which few husbands are willing to do.

  3. Doesn’t prostitution mean simply exchange of money for sexual favors?
    It doesn’t mean there’s any love, offspring, care in sickness…

    How would being a homemaker equal being a prostitute.
    Throughout history there have been women, sometimes men, who did all or most work at home, raised and educated the kids and were paid only in food and shelter. Does that make a prostitute? In Japan where many “salariman” leave home 7 am and may return close to midnight, how can a both spouses work full time and care for the house, pays the bills, raise kids is beyond me. So, if a husband works every day full time, but a wife works only one or maybe 3 days per week, part time, what kind of a prostitute would that make her!

  4. I agree with Miko but certainly not with denny’s comparison. Housewives without children = prostitutes ??? Come on ! These are just women ironically benefitting from a very sexist system which allows them to escape from real life with the benediction of a conservative society. They just don’t want to work, they are afraid of it, they want to be children forever. We can of course critisize them but at the same time everything is made in Japan to discourage women from having a career, even after good studies. They have to chose between a career or children, so their situation doesn’t equal men’s situation. Quitting a job as an Office Lady for marriage is an understandable decision : the job is definitely stupid, it’s an insult to women, who get treated like fresh ornament. Thus it’s only when there is more equality between men and women in society that this kind of opportunistic women will vanish. And more equality at work means a higher birthrate.

  5. I think the women Denny might be referring to are called golddiggers. Young women who don’t want to work, so they hook up with rich old men and live off of their money. At least I hope that’s who he’s referring to, because housework is no joke. It’s a never-ending job. Japanese men need to work less and spend more time with their families, while Japanese women need to get out and be more financially independent. It’s time for a change Japan. Stop living in the 1950s.

  6. You’re right about women’s roles in Japan Sasori. I lived over there for 4 years and worked for several Japanese companies and the OL position is both an insult and a joke. I felt so embarassed having one of my coworkers serving me tea all day. I told her I could get my own. It’s a shame that Japan is so advanced technologically, but so backward socially. Traditions and rituals are great, but when they don’t allow their inhabitants equal opportunity they are enslaving.

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