Japanese social security benefits are paid to workers who meet the applicable eligibility standards, including minimum length-of-coverage and recency-of-work requirements. Under Article 6, if a person has not worked long enough or recently enough to meet the normal eligibility requirements, Japan will add the person's U.S. coverage credits to his or her Japanese credits. If the person meets the requirements based on combined U.S. and Japanese credits, Japan will pay a pro rata (i.e., partial) benefit that is proportional to the amount of coverage credited under the Japanese system.

GENERAL

The Japanese social security pension system is a two-tiered structure consisting of a basic program called the National Pension (NP), and four supplementary earnings-related programs, the most important of which is called the Employees' Pension Insurance (EPI). The NP, or first tier, is a contributory program that covers all residents of Japan. NP or "basic" benefits are paid in flat-rate amounts that are prorated according to the number of years of contribution. The EPI program covers workers employed in firms with at least 5 employees, while the three smaller earnings-related programs cover distinct occupational groups that are covered under government-sponsored mutual aid societies. Benefits under the second-tier programs are based on the worker's years of contribution and earnings level, and are intended to supplement the basic (NP) benefit.

OLD-AGE BENEFITS

Under the NP, full retirement age is 65. Reduced benefits are payable as early as age 60, with increased benefits payable if retirement is deferred until age 66 or later. A minimum of 25 years of NP coverage is required. If a claimant has less than 40 years of coverage, the flat‑rate benefit amount is prorated based on the ratio of the length of the claimant's coverage to 40 years.

An EPI old-age pension is payable at age 60 topersons with at least 25 years of coverage, including coverage under the three mutual aid pension programs. The amount of an EPI old-age pension is directly related to the level of the worker’s earnings and length of coverage, and is adjusted yearly for inflation. Benefit eligibility and amounts are determined similarly under the mutual aid programs.

DISABILITY BENEFITS

Both the NP and the EPI pay benefits to two classes of disability beneficiaries. Class I refers to those who are totally disabled and require constant care. Class II refers to those whose disability prevents them from working. In addition to having a Class I or Class II disability, the claimant must be covered under the EPI or the NP on the date of the first medical examination establishing the disability and have coverage credit for at least two-thirds of the period between age 20 and the date of the medical examination. The EPI also pays a Class III disability benefit for persons with a partial disability that does not prevent them from working. A lump-sum "disability allowance" can be granted under the EPI when the degree of disability is less than Class III.

SURVIVORS BENEFITS

NP survivors benefits are payable to a dependent widow who has a minor child in her care and to the children of a person who was either receiving an NP pension or covered by the NP on the date of death. In addition, the deceased must have had coverage credit for at least two‑thirds of the period from age 20 to death. A lump-sum death benefit is payable if the deceased contributed for at least 3 years, was not entitled to a benefit, and had dependents who are not entitled to monthly survivors benefits.

EPI survivors benefits are payable if the deceased was either covered by the EPI or receiving an EPI old-age or disability pension on the date of death. As under the NP, the deceased must also have had coverage credit for at least two-thirds of the period from age 20 to the date of death. EPI survivors benefits are payable to widowed mothers and orphans under age 18 (20 if disabled). If there are no orphans or widowed mother, a benefit may be paid to another survivor of the worker in the following order of priority: childless widow, widower, parents, grandchildren, or grandparents.

COST-OF-LIVING ADJUSTMENTS

At the beginning of each fiscal year in April, pensions are increased by the change in the consumer price index (CPI). In addition, once every five years, and after the benefit amount has been adjusted for the CPI, the benefit amount is further adjusted according to a wage index.