National / Politics

Lower House passes pension reform bill amid opposition protest

Kyodo

A bill aimed at keeping Japan’s pension system sustainable in the face of a graying and shrinking population passed in the House of Representatives Tuesday amid fierce protests from opposition parties.

The ruling coalition of the Liberal Democratic Party and Komeito are aiming to introduce the bill in the Upper House on Friday at the latest so it can be put to a plenary vote for enactment by Dec. 14, the end of an extension to the current extraordinary Diet session.

The governing parties described the bill as essential to softening the impact of demographic change on the pension system, while the opposition claimed it would threaten the livelihoods of those already struggling to get by on pensions.

The Democratic Party, Japanese Communist Party, Liberal Party and Social Democratic Party oppose the content of what they call the “pension-cutting” bill, as well as the way it has been deliberated in the Lower House.

They claim last Friday’s Lower House committee vote, which opened the door to Tuesday’s plenary session vote, was invalid.

“The government hasn’t released estimates of how much (the bill) would cut the pensions of future generations,” Kazunori Yamanoi, the Democratic Party’s Diet affairs chairman, told a news conference Tuesday morning.

Earlier in the day, the four parties submitted a motion of no confidence for welfare minister Yasuhisa Shiozaki and a censure motion against Hideki Niwa, an LDP lawmaker who heads the Lower House committee. The ruling coalition immediately used its majority in the chamber to vote down the motions.

The pension bill is aimed at maintaining a certain level of pension payments for future generations by changing the relationship of pension payments to movements in wages and prices.

Under the bill, payments from fiscal 2021 will be reduced whenever 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.

The bill would also change from fiscal 2018 the application of an existing rule called the “macroeconomic slide,” which limits pension payment increases to less than the rate of inflation or wage increases.

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 proposed new rule, when deflation prevents payment increases from being limited in a certain year, the equivalent cut will be pushed forward so it can be executed once inflation reappears.

The bill also allows part-time workers at small companies with 500 employees or fewer to join company pension plans and contains a provision to give mothers a break from paying premiums for a period of four months around the birth of a child.

It also contains measures to reform the governance of the Government Pension Investment Fund, the public body tasked with investing pension contributions.