Social Security Numbers and Unified Reform of the Tax System and Social Security

ABSTRACT

The pension record problem has intensified calls for the introduction of social security numbers. Yet, a basic pension number system was introduced in 1997, and a host of problems have occurred since—this suggests that it is overly optimistic to think that simply introducing a unified number system will solve the problems of missing pension records and people not joining or paying premiums.

Using a basic survey on the employment structure, this paper confirms the state of participation in the public pension system and shows the flow of information and money in the social security system. The findings are as follows:

1. While the media has focused on the lack of participation and payment into the basic pension, a look at coverage numbers and premiums shows that people not joining the employee’s pension is also a significant problem.

2. Historical developments have resulted in the employee’s pension system being handled differently among industries. There are no such job-based limitations, however, for worker’s compensation and unemployment insurance. Considering the balance with other systems, distinguishing by industry is losing meaning and should be reexamined.

3. While cutting administrative costs has frequently been emphasized as the economic effect of social security numbers, the fact that checking for coverage leaks and researching devious nonpayment will be made easier by collaborating with the tax system and other social security systems is also important.

4. Linking social security numbers with respondents to, for example, the Japanese Family Income and Expenditure Survey would make collaboration with social security benefits and tax statistics possible, and would also reduce the burden on respondents while improving the accuracy of statistics.

5. Simply introducing social security numbers is insufficient to address problems such as people not joining. Information should be concentrated in tax offices or municipal governments, or, as with the US Internal Revenue Service, a department should be set up where information is centralized.