(C) Welfare Pension Insurance tax

Basically, all employers and employees need to pay Welfare Pension Insurance premiums to the Japanese government under the Japanese laws.  The pension is managed by the Japanese government, so, it is a public pension.  This public pension insurance is not like a “Defined Contribution Plan” (or 401K in the U.S.), but basically a social insurance under which younger generations (less than 60 years old) support elder generations.

The premium is calculated based on each employee’s certain average monthly salary amount multiplied by a certain rate (18.3%), but there is a maximum monthly premium amount (around \114,000).  50% of the premium is payable by the employer and the remaining 50% is payable by the employee.  Welfare pension payments will start when the insured person has paid the premium for 10 years or more and becomes 65 years old.  The pension payment is made on the 15^th of February (for December and January pension), April (February and March pension), June (April and May pension), August (June and July pension), October (August and September pension) and December (October and November pension) and these pension payments will continue until death.  The monthly pension amount differs depending upon period of the employment (insured period of time) and average amount of monthly salary for the period among other conditions.  For example, if the employment period is 35 years and the average monthly salary amount is \500,000, then the monthly pension will amount to around \100,000.

Japan has Social Security Agreements (SSA) with more than 20 countries, including U.S., U.K., Germany and France, to avoid double social insurance premium payments both in Japan and the country where a non-Japanese employee pays social insurance premiums.  Under SSA, a non-Japanese employee is exempted from paying the Welfare pension insurance premium (and Employee Health Insurance premium in the case of U.S. for example) if a Certificate of SSA application, which is issued by the country to which a non-Japanese employee pays similar social insurance premiums, is filed with the employer.

(D) Employee Health Insurance tax

Basically, all employers and employees need to pay health insurance premium to the Health Insurance Association managed by employer companies under the Japanese laws. The premium is calculated based on each employee’s certain average monthly salary multiplied by a certain rate (around 10%) with a maximum monthly premium amount (around \162,000).  50% of the premium is payable by the employer and the remaining 50% is payable by the employee.  A card is issued to each insured employee by the Health Insurance Association.

The insured employee shows the card to a hospital and can receive medical treatment by paying only 30% of the total medical service price if the service is covered by the health insurance.  70% of the price is paid by the Association to the hospital.  The Japanese government (Ministry of Health, Labor and Welfare) defines all medical services which are insured by the Health Insurance and also their prices.

(E) Labor (Unemployment) Insurance tax

Basically, all employers and employees need to pay Unemployment Insurance tax (premiums) to Labor Offices.  Labor Offices inform employers of each employee’s insurance premium amount based on certain monthly salary information provided by the employers.  50% of the premium is payable by the employer and the remaining 50% is payable by the employee.  Employers withhold the employees’ portion of the premium from their monthly salary and pay the premium together with the employers’ portion of the premium to Labor Offices.  The unemployment insurance rate is around 1% of the certain average monthly salary amount.

Unemployment allowance will be paid to the retired employee by Labor Offices for a certain period of unemployment depending upon the reasons/circumstances of unemployment.  The unemployment allowance is calculated based on a certain daily allowance amount (around \5,000~8,000 depending on the amount of salary of the retired employee) multiplied by a certain number of days (90 ~ 270 days) depending on the reasons of unemployment.

Those who are self-employed, they are required to pay National Pension tax (premiums) and National Health Insurance tax (premiums), rather than Welfare Pension Insurance tax (premiums) and Employee Health Insurance tax (premiums) once they get their resident registrations from municipal offices.  The payable amount of these premiums is imposed by each municipal office based on the self-employed party’s income.