The ruling coalition reached final agreement Wednesday on a pension reform program that includes a phased premium increase for salaried workers and benefit decrease to cope with the rapidly graying society.
Following the agreement, the government is expected to approve the pension reform bills at a Cabinet meeting Tuesday for submission to the Diet during the current legislative session.
The reform plan was mapped out as part of the effort to prepare for a severe shortage in financial resources to support the pension system while the working population rapidly shrinks and beneficiaries live longer.
However, the plan puts off dealing with substantial pension reform steps for five years, setting aside such issues as redesigning the pension system to deal with the growing number of part timers and integrating the salaried workers' pension system and that for government employees.
As the pension reform will also affect employers in sharing the burden of employees' premium payments, business leaders criticized the agreement for only coming up with a stopgap measure.
Under the current employees' pension system, the premium takes up 13.58 percent of workers' annual income and is shared 50-50 with employers.
The ruling coalition of the Liberal Democratic Party and New Komeito confirmed Wednesday an earlier decision by the LDP to raise the current premium by 0.354 percentage point every year from October through fiscal 2017, when the premium will reach 18.30 percent. It will be left unchanged thereafter.
Employees' pension payments, on the other hand, will gradually be decreased from the current 59.4 percent of a worker's income to 50.2 percent in fiscal 2023. But the ruling parties agreed to guarantee that the payment will not drop below the 50 percent line.