The amount of pension payments is almost certain to be cut by 0.2 to 0.3 percent next year due to a decline in consumer prices, government sources said Friday.
The payments were reduced 0.4 percent this year.
A government report released Friday says consumer prices were down during the first 10 months of 2011.
The government is expected to include the pension cut in the fiscal 2012 budget, which will be compiled in December, the sources said.
On top of the expected cut, the government is studying a 0.8 to 0.9 percent annual reduction in the pension amount over three years starting in fiscal 2012.
The pension is currently overpaid by 2.5 percent because the government didn’t cut payouts between fiscal 2000 and 2002 despite a fall in consumer prices.
The size of the reduction could top the 1 percent mark in fiscal 2012 if these cuts are implemented.
The Democratic Party of Japan is studying a plan to correct the overpayment over a five-year period to prevent a sharp cut in pension payments for the elderly, who make up an ever-increasing segment of voters.
The DPJ and the Health, Labor and Welfare Ministry will soon launch talks on the matter, the sources said.
The amount of pension payments is revised every year in tandem with prevailing consumer prices.