The Tax Commission, an advisory panel to the prime minister, expressed caution on Friday about granting tax advantages under the planned new pension system.
At a subpanel meeting, many members said that it is not clear whether the Japanese version of the United States’ 401(k) pension plans will have the nature of savings or pensions, said Hiroshi Kato, head of the commission.
Many panel members regard the new system as another form of saving and wondered why the government should encourage savings by introducing the new pension system when Japanese have a much higher savings rate than Americans, he said.
The ruling Liberal Democratic Party has already outlined the new system, which is expected to be introduced as early as next fall. The plan assumes income tax deductions for monthly premiums.
Kato, who is also president of Chiba University of Commerce, said he is personally not happy with the government’s stance on the new system. He said that consistency in taxation between public and private pension plans must also be considered.
The advisory panel will give its official opinion on the issue in its annual package of proposals in December, Kato said.
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