The government has drafted a bill to drastically reform Japan’s corporate pension system with an eye to protecting employees’ rights to receive pension benefits, government officials said Tuesday.

The bill calls for the setting down of criteria for the saving of contributions in order to secure enough reserves to meet the guaranteed payment of workers’ pension benefits.

Corporate pension plans, which manage contributions by employers for payments in addition to public employees’ pension plans, are roughly divided into those managed by big companies and those managed by life insurers and other managers for smaller companies.

The latter would be divided into contract-type and basic-type plans, according to the draft bill. Contract-type plans would be managed by outside managers based on criteria agreed between labor and management.

Basic-type plans would be managed by funds set up by companies.

While pension plans run by big companies would remain as they are, they would be allowed to opt for contract-type or basic-type plans.

Workers would be permitted to choose whether to receive benefits as a pension or as lump-sum payments.

The bill also states that contributions by employers to pension plans would be treated as tax-deductible losses. If employees agree to pay contributions, they would be eligible for tax deductions applied to the payment of insurance premiums.

The government plans to submit the bill to an ordinary Diet session to be convened in January.

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