Social insurance agreement signed with Japan
On 11 April, Minister for Social Security Annika Strandhäll and Japan’s Ambassador Shigeyuki Hiroki signed a social security agreement between the two countries. The agreement coordinates the Swedish and Japanese public old-age, survivors’ and disability pensions systems (for Sweden, sickness and activity compensation). Japan is one of Sweden’s largest trade partners outside the EU.
"The world is getting smaller, and labour market mobility is increasing year on year. Japan is one of our largest trade partners outside the EU, and around 3 000 Swedes work in Japan. This agreement not only increases security for the individual, it is also beneficial for businesses in both countries”, says Ms Strandhäll.
Agreement between Sweden and Japan coordinates pension benefits
The agreement encompasses public old-age and survivors’ pensions and invalidity benefits, and governs whether a person must be insured for such benefits in Sweden or Japan. As the agreement coordinates the Swedish and Japanese regulatory frameworks, individuals will not lose their accrued social insurance rights, primarily pension rights, when they move between the two countries.
From a Swedish perspective, the agreement will make it easier for Swedes working in Japan to receive Japanese pension payments in the future if they return to Sweden. At present – before the agreement enters into force – a Swede has to have worked in Japan for 10 years to receive Japanese pension payments in Sweden.
The agreement also makes it possible to combine Swedish and Japanese insurance periods, making it easier for an individual to meet the conditions on which entitlement to a benefit may be based.
Agreement important for Swedish businesses in Japan
Around 3 000 Swedes work in Japan. This agreement will lead to advantages for Swedish businesses and Swedes working in Japan. Thanks to the agreement, businesses will not have to pay social security contributions for the benefits in question in both countries, meaning they avoid ‘double’ social security contributions.
It will also enable businesses to post workers to the other country for up to five years. For the duration of the posting, the worker will continue to be covered by their home country’s legislation on the benefits in question. Self-employed individuals are also covered by the posting regulations.
Family members who accompany a posted worker to the other country will also be covered by their home country’s legislation on the benefits in question for the same period, as long as they themselves do not work in the other country.
Approval required from both parliaments
Following the signing of the agreement, an application agreement will be negotiated. This is necessary so that the authorities in each country are able to process actual cases.
Next, the countries’ parliaments will need to approve the agreement before it can enter into force. In Sweden, this means the Government submitting a government bill to the Riksdag.
The aim of social security agreements
Social security agreements aim to coordinate parts of the public social insurance systems when an individual moves between Sweden and the other country involved. The intention is that an individual only needs to be insured in one of the countries. This means that people do not lose the social security benefits they have accrued, and social security contributions do not have to be paid in both countries.
Most commonly in such agreements, the basic premise is that individuals are insured in the country in which they work. They usually contain provisions on equal treatment, entitlement to payment of benefits in the other country, combining insurance periods, and administrative assistance between authorities. The rules on combining insurance periods make it possible for Swedish insurance years to be used to meet insurance requirements in the other country.
Sweden’s social security agreements with other countries
Sweden has concluded social security agreements with Bosnia and Herzegovina, Brazil, Canada, Cap Verde, Chile, India, Israel, Morocco, the Philippines, Serbia, South Korea, Turkey and the United States. The social security systems within the EU are also coordinated.