Staff writer

The ruling and opposition camps are at loggerheads over a controversial package of bills designed to save public pension insurance systems, which many experts say are already on the brink of bankruptcy.

The population is rapidly aging as baby boomers are reaching their twilight years.

In 1995, five workers supported one person aged 65 or over; in 2025, two workers will have to support one elderly person, according to the Health and Welfare Ministry.

“It’s a quite simple theory that burdens (on working generations) will accordingly double in 2025,” said Yutaka Fukushima, deputy policy chief of New Komeito who is in charge of pension issues, during a TV debate session aired on Sunday.

The Liberal Democratic Party-Liberal Party-New Komeito coalition is now trying to clear the pension reforms through a Lower House committee by Thursday to carry out a number of measures to gradually reduce the benefits of income-proportional public pensions for salaried workers by up to 20 percent by 2025.

The opposition parties strongly oppose the reforms, arguing that fundamental debate on how to finance the pension scheme should come first to remove the working population’s deep distrust in the future of public welfare investments.

Younger generations are apparently worried that their future benefits may be far less than what they pay into the public pension system.

The Basic National Pension is an insurance system that is supposed to cover all Japanese between age 20 and 60, including salaried workers, self-employed people, farmers and those in the fisheries industry.

According to the Health and Welfare Ministry, about 5.06 million of the 19.36 million self-employed people under the pension were not paying premiums as of 1996 either because they refused to do so or were exempted due to low incomes.

A further 1.58 million did not register their membership for the nationwide pension system in 1995.

Many self-employed people have refused to pay premiums, apparently wary of the future of the system.

The Democratic Party of Japan, the largest opposition force, says the basic pension should eventually be financed by taxes to catch those who avoid paying premiums.

As a first step, DPJ is calling on the central government to shoulder half the cost of the pension from fiscal 2000.

The opposition camp is also strongly against a proposed delay in when policyholders can begin receiving benefits.

Under the current system, a salaried worker can begin receiving benefits from the income-proportional public pension system at age 60.

But the reform package, if passed, would make it 65, although many companies are still unprepared to extend the retirement age five years.

The opposition stance of the DPJ, the Japanese Communist Party and the Social Democratic Party strongly reflects that of labor unions, the most powerful organizations supporting many of the parties’ members.

Officials of the Japanese Trade Union Confederation (Rengo), the nation’s largest union group, have reportedly indicated they will stop supporting New Komeito and Liberal Party candidates.

The coalition itself is also divided. The Liberal Party has staunchly argued that the basic pension as well as public-care and medical services for the elderly should all be financed by the consumption tax. The Health Ministry meanwhile wants the current insurance system maintained.

The tripartite bloc shelved the finance issue in their policy talks before forming their coalition, only agreeing that a “comprehensive framework” covering social security should be established by around 2005.

“The ruling parties’ bills only call for increases in burdens, without showing a clear vision for the pension systems. That’s why we oppose them,” said Takashi Yamamoto, a DPJ Lower House member and a pension and welfare expert.

The DPJ itself, however, has yet to come up with a comprehensive vision of how pensions should be financed in the future.

The DPJ said it will “review” general spending as well as the consumption tax to cover costs necessary for an increase in the burden on state coffers that they want to support the basic pension.

But the DPJ has yet to spell out how much general spending should be cut and, if necessary, how high the unpopular consumption tax should be raised.

“You can say whatever you like if you are not responsible for administration,” said Bunmei Ibuki, who heads the LDP’s study committee on public pension issues.

The DPJ’s Yamamoto said his party will quickly form a consensus on social security financing before the next Lower House election.

The coalition meanwhile appears determined to have the reforms endorsed by the Diet by any means, braving resistance from opposition forces. It plans to hold a public hearing Thursday in the Diet.

The opposition camp is now bracing for that session, where many Diet watchers expect the ruling bloc will forcibly push the package of bills through the chamber committee.

“The current Diet session will reach its climax after (Wednesday) over the proposed (Lower House) seat reduction, supplementary budget and the pension bills,” said Tatsuo Kawabata, the DPJ’s Diet affairs committee chairman.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.