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The government will cut public pension benefits by 0.9 percent in fiscal 2003 to reflect the same rate of decline in consumer prices in 2002, officials said Friday.

It is the first payout reduction since the government enacted the system in 1973 to reflect changes in prices to pension benefits.

The size of the cut was determined as the Public Management, Home Affairs, Posts and Telecommunications Ministry announced in the morning that prices in Japan declined year-on-year by 0.9 percent in 2002 as gauged by a key consumer price index, according to the officials.

The government is to submit the necessary bills to the Diet soon. The reduction in the payout would be implemented April 1.

In a standard model for salaried workers — a man who paid pension premiums for 40 years married to a full-time housewife — the monthly pension benefits will become 235,980 yen a month, down 2,140 yen from the amount paid until fiscal 2002.

Under the standard model, self-employed people will receive 1,200 yen less, down to 132,830 yen a month.

Benefits for civil servants and various public welfare payouts, such as for the handicapped, will be cut accordingly.

Consumer prices registered year-on-year declines since 2000, but the government has frozen the pension-price linkage system to avoid hurting pensioners.

The Finance Ministry, however, wanted to lift the freeze to prevent public pension programs’ tight finances from deteriorating further.

The ministry initially sought a bigger reduction in the benefits to reflect price falls in the past three years but, in the face of strong opposition from politicians and pensioners, it decided the cut would only take into account the price fall in 2002.

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