Even if take-home pay increases, benefits decrease. The substance of profits seen through 'social insurance evasion'
It has been reported that a sales agency dealing in life and non-life insurance is suspected of inappropriately suppressing social insurance premiums.
The name mentioned is the insurance agency All One Agent.
There is a suspicion that the salaries of insurance solicitors, who are employees, were divided into fixed and commission-based pay, and that the commission-based pay was not included in the calculation of social insurance premiums.
At this point, it is only at the stage of suspicion, and it cannot be concluded that the individual company has engaged in illegal acts.
However, similar suspicions are spreading to other insurance agencies, and industry associations are requesting their member companies to conduct self-inspections.
Social insurance premiums are deducted from monthly salaries.
The amount is not small either.
Looking at a pay stub,
'Is this much really being deducted?'
Many people must have thought this at some point.
If premiums become cheaper and take-home pay increases, it might not seem like a bad deal for employees.
However, if social insurance premiums go down, it is not only the employees who benefit.
The amount the company bears also decreases.
And it is not just the monthly burden that decreases.
The Employees' Pension Insurance received in the future and even the benefits when one becomes unable to work due to illness can also become smaller.
This news does not end with just the issue of payroll calculation.
What is being cut to create company profits?
What investors should be asking about is the substance of that.
To conclude,
If social insurance premiums are calculated to be low, employees' take-home pay will temporarily increase.
The labor costs borne by the company also decrease.
On the other hand, if insurance premiums commensurate with the salary are not paid, it will work in a direction that lowers future pensions and benefits during leave.
Even if company profits increase, the employees' coverage may be being cut behind the scenes.
It is not that they have improved their work methods or enhanced their product competitiveness.
If they have simply shifted the costs that should have been borne by them onto the employees' future to make profits look larger, it cannot be called long-lasting strength.
When you find a company with a high profit margin, do not evaluate it based on numbers alone.
Did they increase profits by growing sales?
Did they lower costs by streamlining work?
Did they shift the burden onto employees or business partners?
Even if the profit is the same, the way it is created is completely different.
Social insurance premiums are not determined solely by base salary
The insurance premiums for health insurance and employees' pension insurance that company employees join are calculated based on the 'standard monthly remuneration'.
The standard monthly remuneration is a figure that categorizes monthly salaries into certain ranges.
The basis for the calculation is the pre-tax salary, which includes not only the base salary but also overtime pay, commuting allowances, and housing allowances.
The same applies to commission-based pay.
Even for salaries paid according to the number of contracts or sales, if the employee receives them as compensation for work, they are in principle subject to social insurance premiums.
What was reported this time is the suspicion that only the fixed salary was used for calculation, and commission pay was not included.
For example, even if an employee receives 500,000 yen every month, if the insurance premium is calculated based only on the 150,000 yen fixed salary, the amount paid by the employee and the company will be significantly lower.
The employee's take-home pay increases.
The company's burden also becomes lighter.
If you only look at the numbers right in front of you, it seems like there is a benefit for both sides.
Take-home pay and company costs decrease. Benefits also decrease.
Health insurance premiums and Employees' Pension Insurance premiums are basically shared equally between the employee and the company.
From the company's perspective, even if they increase a salary by 10,000 yen, labor costs do not just increase by 10,000 yen.
The company's share of social insurance premiums also increases.
For companies with many sales staff on commission, the burden also becomes significant.
That is precisely why keeping social insurance premiums low benefits the company's profits.
If the number of employees is large, it will likely amount to a considerable sum over the year.
However, the standard monthly remuneration is not a figure used only for calculating insurance premiums.
It is also related to the Employees' Pension you will receive in the future.
The Employees' Pension has a portion where the amount is determined based on the period worked and the salary level.
If the standard monthly remuneration is recorded lower than the actual salary, it will also work to lower your future pension.
The impact is not limited to old age.
The injury and sickness allowance received when taking a long leave from work due to illness or injury is also calculated based on the standard monthly remuneration.
The same applies to the maternity allowance received when taking leave from work for childbirth.
If social insurance premiums are calculated to be low,
Current take-home pay increases.
The company's burden also decreases.
In exchange, the pension in old age and benefits when taking leave for illness or childbirth decrease.
This is the relationship.
If you look only at take-home pay, it may seem like a gain.
However, if the money you were supposed to receive in the future decreases, you cannot say for sure that you have truly gained.
The contradiction is stark precisely because it is a company that sells insurance
Insurance agencies have the job of explaining to customers the importance of preparing for future risks.
When you get sick.
When you become unable to work.
When your income in old age is insufficient.
When the unexpected happens.
They convey the meaning of paying money every month for coverage that is hard to feel the necessity of right now.
That insurance agency is suspected of having reduced the public coverage of the employees working for them.
If this is true, it cannot be dismissed as a mere payroll calculation error.
It would mean that while they were recommending preparation for the future to customers, they were suppressing the burden of supporting their own employees' futures.
Insurance agencies are entrusted with long-term contracts from customers.
They also handle important personal information such as family structure, income, and health status.
Is that company an organization that follows systems and laws?
Are they also sincere toward their employees?
Trust in the company is the very foundation of the business.
Even if sales volume and commission income are growing, growth built by eroding trust will not last long.
What are companies with high profit margins cutting back on?
Investors evaluate companies with high profit margins.
For the same amount of sales, a company that can retain more profit is stronger.
This way of thinking itself is not wrong.
However, profit margin alone does not reveal the inner workings of a company.
Is it because of high technical capabilities, allowing them to sell at higher prices than competitors?
Are they streamlining operations and running the business with fewer people?
Did they review procurement and logistics to reduce wasteful expenses?
Are they suppressing employee wages and social insurance premiums?
Are they forcing suppliers to lower prices and shifting the burden onto them?
Even with the same operating profit, the way it is generated differs.
If the profit is born from product strength or operational improvements, it accumulates as the company's competitiveness.
On the other hand, if it is just shifting costs that should have been borne by the company onto employees or business partners, problems will eventually surface.
Being asked to pay past insurance premiums retroactively.
Disputes with employees arising.
Being unable to attract talent even when hiring.
Losing trust from customers and business partners.
What appeared to be profit can sometimes turn into a large expense later on.
Investors do not just track the amount of profit.
They track who is bearing the burden of that profit.
Performance-based systems also track how sales are generated.
At insurance agencies, commission-based systems where compensation increases according to the number of contracts or commission income are sometimes used.
There is nothing inherently wrong with a system that rewards high achievers.
People with strong sales skills can increase their income regardless of age or years of service.
Companies can also pay compensation based on sales performance.
However, in companies with a strong performance-based culture, it is easy for unreasonable practices to arise in order to hit numbers.
Are they prioritizing products with high commissions over the customer's best interests?
While increasing sales, are employee training and management keeping pace?
Is the method of paying compensation in line with social insurance and tax systems?
We look not only at the result of growing sales, but also at how those sales were generated.
In finance and insurance, in particular, the products are invisible.
What customers are buying is future security and trust in the company.
In the long run, a company that can build relationships with customers while maintaining proper management should be stronger than one that simply increases short-term sales volume.
You can also check your own pension records
This news is not just for investors.
It is also an opportunity for employees to learn whether their salary is being correctly reflected in their social insurance.
On the Japan Pension Service's 'Nenkin Net,' you can check the standard monthly remuneration for Employees' Pension Insurance for each month.
Your salary has changed significantly, but the standard monthly remuneration is unnaturally low.
Compared to your income, the social insurance premiums on your pay stub are extremely low.
In such cases, it is a good idea to compare your pay stub with your pension records.
Social insurance premiums are not just a burden that ends once paid.
They support the current medical system and are linked to your future pension and coverage for when you are unable to work.
It is a fact that the burden is heavy.
However, that does not mean that lower is unconditionally better.
Summary
If social insurance premiums decrease, the employee's take-home pay increases.
The labor costs borne by the company also decrease.
However, in exchange, future Employees' Pension benefits and benefits for when you are off work due to illness or childbirth may also be reduced.
If the suspicions reported this time are true, even if the company's profits increase, it means those profits were created by cutting into employee coverage.
When I analyze companies, I place importance on high profit margins.
However, I do not choose a company for investment just because the numbers are high.
Is it profit from enhancing product competitiveness?
Is it profit born from streamlining work?
Is it profit created by cutting what employees or business partners receive?
I dig into how the profit is made.
A temporary increase in take-home pay is not the same as being able to work with peace of mind for a long time.
Increasing profits is not the same as a company becoming stronger.
Choose companies that correctly bear necessary costs and still manage to retain profit.
What we should think about from the suspicion of 'social insurance evasion' is not the amount of profit, but its substance.