Japan Enacts Revised Pension Reform Bill

Jiji Press

15:24 JST, June 13, 2025

TOKYO (Jiji Press) — Japan’s parliament enacted Friday a revised pension reform bill that calls for a measure to shore up basic pension benefits.

The legislation passed the House of Councillors, the upper chamber of the Diet, by a majority vote, receiving support from the Liberal Democratic Party-Komeito ruling coalition, the main opposition Constitutional Democratic Party of Japan and others.

The basic pension improvement plan was initially not included in the government-submitted bill, reflecting opposition among LDP members, but a supplementary provision calling for such a measure was added following an agreement between the ruling bloc and the CDP. The revised bill had cleared the House of Representatives, the lower chamber, last month.

Benefit levels, which are expected to decrease over time due to Japan’s shrinking and aging population, would be hiked if a significant decline is expected following the 2029 review of pension finances.

The pension system reform measures in the bill reflect the results of the latest quinquennial review, published in 2024.

Basic pension benefits for all citizens are seen decreasing by 30% in three decades, and the government had sought to make a boost to the benefits the centerpiece of the pension reform bill.

But the measure did not make it in the bill after some LDP lawmakers criticized the government’s plan to use funds from the “kosei nenkin” public pension program for corporate and other employees for the hike, claiming it would be a misuse of kosei nenkin funds. The measure was put back into the bill following three-party talks led by the CDP.

The government would take steps to ease a possible temporary decrease in kosei nenkin benefits for some people as a result of the measure.

Although half of the basic pension benefits are paid from the state coffers, the three parties did not reach a conclusion on how to secure funds for the expected increase in the burden on government finances due to the hike.

The enacted bill also includes a plan to expand the kosei nenkin coverage to a wider range of part-time and other nonregular workers. It will scrap in October 2035 eligibility requirements regarding the minimum number of workers at companies, currently set at 51 employees, and the minimum annual income of workers, presently at ¥1.06 million .

Following these changes, all employees who work at least 20 hours a week will be required to join the kosei nenkin program, allowing them to receive benefits that add to the basic pensions after retirement. The steps are seen increasing enrollment by around 1.8 million people.

The government will provide aid to alleviate the burden on small businesses that are heavily impacted by the changes as employers shoulder half of the kosei nenkin premiums of their employees.

In addition, the legislation calls for reviewing a system that reduces kosei nenkin benefits for working elderly people. The monthly income threshold for cutting benefits given to workers aged 65 or older will be raised to ¥620,000 in wages and benefits combined, from the current ¥510,000 .

The change is aimed at allowing more elderly individuals to receive their full pension payments while working.

Other measures in the bill include raising the cap on kosei nenkin premiums for high income earners, eliminating the gender gap in kosei nenkin benefits given to the family of deceased workers and expanding the age eligibility for joining the iDeCo defined-contribution personal pension program to those under 70 years old.