Jan 26, 2018 (the-japan-news.com) - The Japanese and Chinese governments are in the final stage of discussions on a social security agreement aimed at resolving the issue of double payments of pension premiums by Japanese and Chinese employees dispatched to each other’s countries, it has been learned.
According to multiple sources close to Japan-China relations, the two governments aim to effectively agree on the deal when Foreign Minister Taro Kono visits China on Saturday and Sunday. It is expected to be signed by the end of this year.
The agreement will cover about 70,000 employees of Japanese companies working in China, and is expected to ease the financial burden on the Japanese side by a total of more than ¥40 billion a year.
The two governments began negotiations in 2011. However, in 2012, the Japanese government put the Senkaku Islands in Okinawa Prefecture under state control, which the Chinese government opposed. As a result, the negotiations were suspended for more than three years.
However, the negotiations have since progressed significantly thanks to the recent improvement of the relationship between Japan and China. In October last year, the eighth round of negotiations was held in Tokyo, where the two countries reached an agreement on major points.
Japanese employees transferred to Chinese offices are currently required to pay social insurance premiums, such as premiums for pension insurance and health insurance, to Chinese authorities, while also paying such premiums in Japan. The same applies to employees of Chinese companies working in Japan.
Regarding pension premiums, the payment burden for which is said to be especially heavy, Japan and China agreed to have employees who work for five years or less in the other country only join the pension plan of their home country and exempt them from the obligation to join the pension plan of the other country. They also agreed to have employees who work in the other country for more than five years just join the pension plan of the other country, in principle.
