Foreign assignments involving mobility of international workers has always been entangled in the complexities of two legislations. To ease out the hindrances and protect the interest of cross border workers of India and Japan, India has signed social security agreement (SSA) with Japan w.e.f. Oct 1, 2016. This will result in not only providing the benefits to employees by way of avoidance of dual coverage and equality of treatment to workers of both countries but also cutting off the major portion of employment cost to the employer. The agreement applies to Japanese pension system as well as Indian social system.
Key Features of the Agreement
1. Benefits Covered
I. Japanese pension system which includes:
i. National & Employee Pension;
ii. Mutual Aid Pension for National Public Officials, Local Public Officials & Personnel of similar status, Private School Personnel.
II. Indian social system includes:
i. Old-age & survivors pension for employed persons namely EPF Scheme[1], EPS Scheme[2] & EDLI Scheme[3]
ii. The permanent total disability pension for employed persons.
2. The SSA between Indo-Japan is based on three parameters/limbs:
I. Detachment:
i. COC[4] has to be obtained from home country in case employees assigned to the host country for a period upto 5 years. Once the COC has been obtained, employees are not required to pay social security contribution in host country provided that they should continue making social security contribution in home country;
ii. This coverage may be extended for more than 5 years with mutual consent of the competent authorities of both the countries.
II. Totalization of Benefits: The period of contribution i.e. service rendered in home country will be added to the period of contribution in host country in determining the eligibility of social security benefits.
III. Exportability of Benefits:
i. No constraint on export of benefits simply because the person ordinarily resides outside the territory of that contracting state;
ii. Benefits under the legislation of a contracting state shall be paid to the nationals of the other contracting state who ordinarily resides in the territory of a third country, under the same condition as if they were nationals of the first contracting state;
iii. Payment of benefits will be made directly in freely convertible currency.
3. Lump Sum Payments
I. In Japan: In accordance with the legislation of Japan, nationals other than Japanese may claim the lump sum payments upon withdrawal of benefits.
II. In India:
i. IW[5] covered under the Indo-Japan SSA is entitled to withdraw the full amount of PF balance under the EPF Scheme, 1952, on ceasing to be an employee in an establishment covered under the EPF Act[6], 1952;
ii. IW covered under the Indo-Japan SSA is entitled to withdraw the pension balance under the EPS Scheme 1995, even if the requirement of eligible services for monthly member pension is not fulfilled even after including the totalization benefit as provided in the agreement.
Further, this shall also be applied to IW who had been subject to the legislation of India prior to the entry into force of this agreement.
[1] Employees’ Provident Fund Scheme, 1952
[2] Employees’ Pension Scheme, 1995
[3] Employees’ Deposit Linked Insurance Scheme, 1976
[4] Certificate of Coverage
[5] International Worker
[6] Employees Provident Funds and Miscellaneous Provision Act, 1952
