The Issues on Pension Systems

The Government says that there are several problems in the pension systems in Japan. 

(1) As Japan is developing into an ageing society very fast, the pension systems are not sustainable as they are.  To maintain the benefits level, workers and employers must pay higher and higher premiums, so the balance between the benefits and premiums must be adjusted. 

(2) Recently people, especially women, have many choices of the life-styles.  The pension system must stand neutral in choosing the life-styles. 

(3) Recently people, especially young people, do not trust pension systems.  It is important to restore people's confidence in pension systems.

Pension Systems in Japan

Before I go into the issue of pension reform, I want to give you a general idea about the pension systems in Japan.  Japan has a double deckered public pension system consisting of the national basic pension scheme common for all and the employees' pension scheme as additional pension for employed workers. The Figure on the next page shows how the pension systems in Japan are and how many people are enrolled in them. 

The Issues on Pension Systems

The Government says that there are several problems in the pension systems in Japan. 

(1) As Japan is developing into an ageing society very fast, the pension systems are not sustainable as they are.  To maintain the benefits level, workers and employers must pay higher and higher premiums, so the balance between the benefits and premiums must be adjusted. 

(2) Recently people, especially women, have many choices of the life-styles.  The pension system must stand neutral in choosing the life-styles. 

(3) Recently people, especially young people, do not trust pension systems.  It is important to restore people's confidence in pension systems.

Japan Pensioners' Union maintains that the real problems of the pension systems in Japan are as follows.

(1) Forty- seven percent of the people in Japan are expected to receive only national basic pension benefits in their old age.  The average amount of the basic pension benefits is 46 thousand yen.  This is hardly enough to support their lives.  In addition, 620 thousand people of age 65 and over have no pension at all.

(2) The gender gap in pension benefits is very large.  In employees pension benefits, the average amount for men is around 190 thousand yen.  While, the average amount for women is around 110 thousand yen.  As women are likely to live alone four times as much as men, this is a serious problem.

(See the figure.)

(3) The pension systems are getting "hollow" inside.  The premium for the national basic pension is so high that the people who cannot pay the premium are increasing year by year.  The figure shows the situation.

Pension Reform in Japan

The issues of pension reform have been the major political and social issues for several years.  The discussion was not enough but the Government submitted the pension reform bills to the regular session 159 this year and rammed them through the Diet.  According to the public opinion polls, however, as much as 70 percent of the people do not value the reform and still are against it.  Japan Pensioners' Union consider the reform the worst option, because it brings the heavier burden to the working people.

The Points of the Reform are as follows.

(1) Premiums for employees’ pension scheme as well as for national basic pension scheme will be raised yearly until 2017, when the rate of the premiums will be fixed (except price and wage adjustment). 

(2) The benefits will decrease automatically according to the drop of the work force and the rise of life span.  The government says that the benefits of the model family will not be less than 50 percent of the average male wages.  In the interpellation, it became clear that only a few families will apply to the model and the benefits will drop below 50 percent after the benefits amount is decided. As the years go by, the gap between the wage and the pension will get larger. 

(3) Concerning women's pension, much has been discussed on whether collecting premiums from wives or not and on whether part-time workers should be admitted to the employees’ pension scheme.　These issues were not included in the recent reform bill. 

Japan Pensioners' Union maintains that the pension reform problematic in the following respects. 

(1) Raising premiums will accelerate the pension systems becoming hollow inside, increasing the people who cannot pay premiums because of the poor income.  The pension reform will increase the small corporations, which will withdraw from employees’ pension scheme as well as the number of the workers who will be expelled from employees’ pension scheme because of the dismissal and the unstable employment.

(2) Not only employees' pension but also national basic pension, which is very low as it is, will be cut down.  The balance between premiums and benefits in this pension reform is assumed on the trial calculation based on the decrease of birthrate, the decrease of work force, rising of wage and price, but the trial calculation is not certain and may differ on a large scale, in which case the pension benefits may not be secured. 

(3) Raising the rate of funding by national treasury from the current one-third of the national basic pension to one-half is postponed, and it will hasten the deterioration of pension funding.  Savings of pension premiums have been used on building unnecessary facilities and hazardous investment on stocks.  Savings of pension premiums should be used to improve pension systems.

(4) The serious issue of older people who have no pension at all or only a small pension benefits have been left out.  The gender gap of pension benefits is extremely large.  The pension reform has not given any answers for these issues.

Conclusion

The government should guarantee "the right of everyone to social security" as provided in the International Covenant on Economic, Social and Cultural Rights, by reforming the pension systems for the better.  The UN Committee on Economic, Social and Cultural Rights recommended to the Japanese Government that the Japanese Government should "incorporate a minimum pension into the national pension system" and also "the persisting de facto gender inequality in the pension system be remedied to the maximum possible extent" in its concluding observations in 2001.  Japan Pensioners' Union strongly demands that the government should observe these recommendations. Japan Pensioners' Union considers that the Government should withdraw the pension reform and make a fresh start on building up a minimum pension system funded by national treasury, which will secure every older person's life.