When a Lower House committee voted late in November in an attempt to enact a bill to reform the nation's pension system, many Japanese must have been pained to see politicians play games with a national issue that will affect the livelihood of almost every one of us in our old age. The bill passed the Lower House on Tuesday, but there is no prospect that it will be acted upon by the Upper House during the current Diet session that ends Dec. 15. Fortunately, no change is preferable to hasty change for the worse.
As more people reach the age at which they will receive pensions in a low-growth economy, the state pension fund will go broke unless more money is collected from a dwindling working population or benefits are reduced. The latter can be achieved by pushing up the minimum pensionable age, slashing the pension amount, or a combination of the two. None of these choices is painless. A responsible government must, therefore, do everything possible to minimize pain. Failing that, it must, when necessary, share it equitably among all the population.
The government's proposed legislation has three salient features. First, starting in fiscal 2000, it will reduce payments by 5 percent starting in the salary-linked portion of the "kosei nenkin" pension scheme, and freeze "salary-indexed" payments. Second, starting in 2013 and continuing over a 25-year period, it will gradually push the minimum pensionable age from 60 to 65, and institute an old-age pension scheme for working pensioners aged 65-69 that would involve a cut in pension payments if nonpension income exceeds a certain level. Third, it will raise the state contribution to the national "kokumin kiso nenkin" pension fund from one-third to one-half of the premium. The last offer comes with a big proviso: The government would only raise the share of the state contribution if "stable sources of revenues are secured by 2004." As a palliative for this bitter medicine, the government has decided to suspend its plan to raise the premiums for the salaried pension scheme that had been scheduled to kick in this year.