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The three ruling parties will start studying a plan to provide parents of children under 16 with monthly benefits as a way to curb the declining birthrate, party officials said Sunday.

Members of the Liberal Democratic Party, New Komeito and the New Conservative Party will begin discussing the plan among themselves and with the government in the near future with the aim of introducing the system in fiscal 2004, the officials said.

According to a blueprint compiled by Akihiko Kumashiro, head of the LDP’s Social Affairs Division, and other LDP members, parents will receive 10,000 yen every month per child for up to two children, and an additional 20,000 yen per subsequent child.

Of the 2.7 trillion yen cost of the scheme, the draft plan envisions state coffers providing some 1.25 trillion yen and the rest being funded by an increase in premiums for the basic pension program. The 1.25 trillion yen from state coffers will be provided by abolishing the income tax deduction for households with children under 16, the officials said.

The use of the pension system to fund the program is believed to have been proposed to replace an earlier child allowance expansion plan pushed by New Komeito. The party’s plan proposed raising the age limit for children under the allowance program from 5 to 15, but its method of financing was considered too costly.

Under the new plan, contributors to the basic pension program would not see their actual premium payments increase as the government’s contribution to the basic portion of the pension program will rise to half from the current one-third by 2004.

However, it remains uncertain whether the government can secure a stable source of revenue for the national pension system, whose financial sustainability is in doubt in light of the rapid aging of Japan’s population.

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