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Last Updated: Friday, 7 May, 2004, 07:43 GMT 08:43 UK
Japan minister quits over scandal
Chief Cabinet Secretary Yasuo Fukuda closes his eyes during a press conference on pension payments  April 28, 2004
Mr Fukuda admitted last week he had failed to pay some premiums
A key Japanese minister has resigned after admitting he failed to pay into the national pension scheme.

Yasuo Fukuda, chief cabinet secretary, was a close adviser to Prime Minister Junichiro Koizumi and was also seen as a possible successor.

He is one of seven ministers to have admitted skipping payments, though two others said they would not resign.

The scandal comes as Japan's Government struggles to maintain public confidence in national pensions.

The national scheme is under threat because, while there are increasing numbers of pensioners, many Japanese fear paying into a pension will not afford them full benefits when they retire because there are relatively fewer young people to contribute.

The BBC's correspondent in Tokyo, Jonathan Head, says the fact that so many politicians have not kept up their contributions will make it all the more difficult for the government to push through the reforms necessary to keep the pension scheme afloat.

Son of former Prime Minister Takeo Fukuda
Longest serving chief cabinet secretary - appointed in Oct 2000
Earned reputation as slick public relations expert

The resignation of Mr Fukuda is also a major personal loss to Mr Koizumi.

He has been the government's chief spokesman, and a key ally and adviser to the prime minister, for the past three years.

"I am ashamed of myself for having undermined the trust of the nation as a result of the non-payment of pension premiums," Mr Fukuda told a press conference.

"I would like to apologise for having intensified distrust in politics due to an inept response on my part as the cabinet's spokesman," he said.

Mr Fukuda admitted last week that he failed to make payments for a total of 37 months, from February 1990 to September 1992 and from August to December of 1995.

He said that the payments failure was not deliberate, but that he stopped payments when he changed jobs, thinking he was covered under a different scheme.

"The system was very complicated, and I regret my misunderstanding of it meant that I didn't make the payments," he said.

Widespread scandal

Other ministers who have said they also skipped payments include Finance Minister Sadakazu Tanigaki and Financial Services Minister Heizo Takenaka.

Mr Tanigaki said he had no plans to resign, while Mr Takenaka said Mr Koizumi had asked him to stay on, according to Reuters news agency.

Mr Koizumi's administration is not alone in the scandal. The leader of the main opposition Democratic Party of Japan, Naoto Kan, has also admitted failing to pay contributions in the 1990s when he was health and welfare minister.

Mr Koizumi himself has said he has kept up to date with the mandatory payments.

Most Japanese employees have their contributions deducted automatically from their salaries, but politicians, students and the newly unemployed must make the payments themselves.

Either deliberately, or by accident, about 40% of the 18 million self-employed people and students aged 20 or older did not pay the obligatory premiums for the National Pension System in fiscal 2002, according to the social insurance agency.

It is not clear how far the scandal will affect the ruling Liberal Democratic Party's coalition in Upper House elections next month.

Not enough seats are being contested to threaten the government's majority, but a poor showing could nevertheless be damaging for Mr Koizumi.

Whatever the election result, the scandal is likely to hinder the government's plan to reform the pension scheme.

The bills call for raising premiums every year to 2017, while reducing benefits.

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