The ruling bloc rammed a bill through committee Friday aimed at softening the impact that the nation’s shrinking and graying population is expected to have on the pension system. The bill is now expected to clear the Diet this session.
The ruling parties describe the bill as essential to keeping the system sustainable for future generations. The opposition claims it will bring suffering to those who are already struggling to get by on their pensions.
The Liberal Democratic Party-Komeito ruling coalition is expected to extend the extraordinary session on Monday in order to get the bill passed. The extra session is currently set to end Wednesday.
The bill, to apply from fiscal 2021, would require pension payments to be reduced when the working-age population, whose contributions fund the system, experiences a decline in wages.
Current rules keep payment levels the same even if wages decline, while if consumer prices and wages decline at the same time, the decrease in pension payments is pinned to the fall in prices rather than wages.
“Future pension levels won’t decline below forecasts,” Prime Minister Shinzo Abe told the health, labor and welfare committee in the House of Representatives.
The bill also proposes to change, from fiscal 2018, the application of the “macroeconomic slide,” a rule that limits pension payment increases to less than the rate of inflation or wage hikes.
The rule is aimed at combating the effects of population decline and demographic shift but has found little use in the face of the deflation that has plagued Japan’s economy since the late 1990s.
Under the new rules, when deflation prevents payments from being limited in a certain year, the equivalent cut will be pushed forward so it can be executed once the economy starts booming and inflation reappears.
The ruling coalition used its majority in the committee to approve the bill despite fierce opposition from the Democratic Party and the Japanese Communist Party, which said the bill had not undergone sufficient deliberation.
The opposition dubbed the move “the pension-cutting bill,” with Democratic Party lawmaker Michiyoshi Yunoki saying Friday it “ignores the livelihoods of people living on pensions.”
The bill would also allow part-time workers at small companies with 500 employees or fewer to enter their pension systems.
It would reform the governance of the Government Pension Investment Fund — the public body tasked with investing pension contributions — and give mothers a break from paying premiums for four months around the birth of a child.
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