Japan's pension system has many problems. It is complex. The Kokumin Nenkin pension system is for self-employed people, pensioners and jobless people. The Kosei Nenkin system is for workers at larger companies, and the Kyosai Nenkin system is for public servants and teachers. There is another system for workers at small companies.
Premiums and benefits differ from system to system. Less than 50 percent of Kokumin Nenkin participants are actually paying their premiums. If this rate of delinquency keeps up, it is feared that many people will have to live on small pensions, if any, thereby creating a serious social problem.
The ruling Democratic Party of Japan proposes creating a unified system covering everybody under the principle that people with the same incomes should pay the same premiums. The proposed system would consist of the minimum, guaranteed monthly benefit of ¥70,000 plus the benefit linked to the amount of premiums individuals have paid. The guaranteed portion would be fully funded by consumption tax revenue. When the premium-linked benefit increased beyond a certain level, the guaranteed benefit would be reduced accordingly.