There has been criticism that public servants have been receiving advantageous treatment in retirement allowances and pension benefits, compared with corporate workers.

A government panel on July 3 came up with a proposal to rectify the situation. But the proposal is not enough to equalize the treatment of public servants and corporate workers.

According to a survey by the National Personnel Authority, a corporate worker who retired in fiscal 2010 received an average ¥25.48 million (a retirement allowance plus corporate pension), excepting public pension, while the corresponding figure for a retired national public servant was ¥29.50 million (a retirement allowance plus the tax-financed portion of an additional pension benefit peculiar to public servants) — the latter receiving about ¥4 million more than the former.

To eliminate the difference, the panel proposed gradually reducing the retirement allowances for public servants. But the panel proposed to maintain the additional pension benefit for public servants in a different form.

Since the pension system for public servants is advantageous, compared with corporate workers, the government has submitted a bill to unify the kosei nenkin pension system for corporate workers and the kyosai nenkin pension system for public servants (and private school teachers).

At present, the premium rate for the kosei nenkin system is 16.412 percent of monthly wages while the rate for the kyosai nenkin system is 15.862 percent. The former will be raised to 18.3 percent from September 2017 and the latter will be raised to the same level from September 2018.

Under the bill, the names of the different systems will be unified as the kosei nenkin system in October 2015.

Currently the kyosai nenkin system gives an additional monthly pension benefit of about ¥20,000 on average, although public servants (and private school teachers) do not have to pay additional premiums to get the benefit.

The panel proposed linking the additional benefit to the yield of 10-year national bonds and other long-term interest rate indexes and lowering the level of the additional benefits. But future investment risks may necessitate use of tax money to pay for the benefits.

The panel also said the additional benefits correspond to corporate pension, as distinct from public pension, for corporate workers. But only about 60 percent of Japan’s companies have corporate pension, most of them major companies. Whether the additional benefits should be retained remains in question.

Despite planned integration of the different pension systems, only about ¥24 trillion of some ¥45 trillion funds accumulated by the kyosai nenkin system will be transferred to the kosei nenkin system. The remaining sum will be used to pay for the additional pension benefits for public servants who have already retired.

More discussions are needed on how to equalize pension benefits for public servants and corporate workers.

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