The government decided Tuesday to reform the pension system by expanding the range of part-time workers who can join the kōsei nenkin public pension program for corporate employees.

The measure is aimed at increasing the number of people, especially women and elderly workers who tend to hold part-time jobs, paying into the system.

The proposal, approved at a Cabinet meeting, will gradually expand the eligibility of part-time workers and other short-term workers for the pension program.

Those working at companies with payrolls of 101 people or more will be subject to the kōsei nenkin system starting in October 2022, while those employed by companies with 51 or more workers will become eligible two years later. Currently, the workforce requirement stands at 501 or more.

The revision is expected to lead to an increase of some 650,000 in the number of workers participating in the pension program.

The move may be rough on small companies, since half of workers’ premiums are paid by employers under the system.

The government will also review its system of reducing pension payments for high-income elderly workers in fiscal 2022 in light of an increase in the number of elderly people continuing to work.

Currently, workers between the ages of 60 and 64 are subject to benefit reductions if their wages and pensions together exceed ¥280,000 per month. The government plans to raise the income threshold to ¥470,000.

Additionally, the government will allow people to choose between age 60 and 75 to begin receiving pensions, raising the upper age limit from 70. The later people become pensioners, the higher their monthly benefits.

A new system will be introduced to increase the amount of pensions for workers who continue to work and pay into the pension program at age 65 or older.

The age requirement for other pension systems will also be reviewed to reflect the reality of elderly workers. The requirement for joining the corporate-type defined contribution pension system will be relaxed from under 65 to under 70, while the upper age limit for starting to receive pensions under the system will also be raised, from 70 to 75.

Similar changes will be made to rules for joining iDeCo, an individual-type defined contribution pension plan, in which self-employed people or company employees invest their own money. In addition, the government plans to stop issuing new pension handbooks in favor of notices for basic pension numbers, as well as exempt unmarried single parents with low income from having to pay premiums for the kokumin nenkin national pension program.

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