Examination of Fiscal Status of Pension System: Increase People Paying into System, Enhance Public Confidence
15:10 JST, July 4, 2024
As the birth rate continues to decline, the number of people paying into the public pension system is also decreasing. What must be done to ensure stable operation of the pension system?
The government must consider measures to be taken at an early stage and must also enhance public confidence in the system.
The Health, Labor and Welfare Ministry has released a report examining the fiscal condition of the pension system, as it does every five years. The aim is to estimate future amounts of pension benefits based on the economic outlook and other factors, and to discern future issues.
Looking at a model household comprising a male company employee and his wife, a full-time homemaker, both of whom have reached 65, the focus of the examination is whether the amount of pension benefits they receive can be maintained at “over 50%” of the average take-home pay of an active male worker.
Assuming an average economic growth rate of minus 0.1%, the fiscal examination found that their pension benefits in fiscal 2060 would be 50.4%, or ¥214,000 a month. If the average growth rate is set at 1.1%, the couple’s benefits would increase to 57.6%, or ¥338,000 a month.
Currently, the average take-home pay for active male workers is ¥370,000 per month, and pension benefits are 61.2% of that amount, or ¥226,000 per month. According to the fiscal examination, the future payment level will be lower than today’s 61.2%, but it is expected to remain “over 50%” as required by law.
In the examination conducted five years ago, the projected level of pension payments was only 51.9%, even assuming the highest growth rate.
The improvement in the future outlook compared to five years ago appears to be due to the fact that the fiscal condition of the pension system has improved as more women and elderly people have gained employment, meaning that working women and others have joined the pension system and the number of people who pay premiums has increased. Another factor is the strong performance of pension reserve funds due to the recent rise in stock prices.
However, the fiscal examination is only a trial calculation.
The government had been considering extending the premium payment period for the national pension program, in which self-employed workers and others are enrolled, by five years to age 64.
However, since the future outlook for the employee pension program was better than expected in the latest fiscal examination, the government intends to hold off on the idea, wary of growing opposition to increases in the additional burden imposed by the national pension program.
It is true that a five-year extension of the premium payment period would result in a total premium burden of ¥1 million. On the other hand, it is said that the national pension benefits to be received in the future would be expected to increase by about ¥100,000 per year.
The pension system is the foundation that supports people’s lives in old age. The government should thoroughly explain the significance of stabilizing the system and seek the public’s understanding of the burden.
It has been pointed out that the model household in the fiscal examination does not reflect the actual situation of Japan today as the number of two-earner households has been increasing. To raise the interest of the working-age population, it would be advisable for the government to reexamine its image of households.
(From The Yomiuri Shimbun, July 4, 2024)
"Editorial & Columns" POPULAR ARTICLE
-
ASEAN Meetings: Work to Deepen Cooperation Based on Trust
-
Nobel Peace Prize: Take Award as Chance to Contain Nuclear Threats
-
Lower House Campaign Starts: Parties Must Debate Policies for Overcoming Difficult Problems / Chance for Voters to Determine Japan’s Future
-
Why Is BRICS Appealing To Southeast Asian Nations? Japan Must Keep Close to Its Neutral Neighbors
-
Measures against Regional Imbalance of Doctors: Consider Adjusting Medical Workplaces
JN ACCESS RANKING
- Asukayama Monorail in Tokyo: Free to Ride!
- Japan Trying to Draw Digital Nomads, Who Are Seen as Beneficial to Economy, Society
- JICA Employee Suspected of Leaking Info on ODA Project in Manila; Bidding for Railway Renovation May Have Been Impacted
- G20 Sees Soft Landing for Global Economy; Leaders Pledge to Resist Protectionism as Trump Calls for Imported Goods Flat Tariff
- Japanese Automakers Team Up on Software Development; Aim to Compete with U.S., China in SDV Market