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In order for everyone to live out their senior years with peace of mind, it is essential to continuously review the public pension system.
As the population ages and the birth rate declines, it will become increasingly important to increase the number of people supporting the system. To achieve this, it will become unavoidable to ask small- and medium-sized enterprises and part-time workers to bear new burdens. It is essential to carefully explain these circumstances and gain understanding from the public.
The details of the government’s pension reform bill have been finalized. As a general rule, people who work part-time for 20 hours or more per week will be required to enroll in the employees’ pension program.
Currently, among part-time workers, only those earning an annual income of ¥1.06 million or more are eligible for the employees’ pension program. Most part-time workers earning less than this amount are instead enrolled in the national pension program. The bill aims to increase the number of people enrolled in the employees’ pension program by abolishing the income requirement.
The average monthly pension benefit for the employees’ program, in which mostly company employees are enrolled, is ¥146,000. On the other hand, the figure for the national program is only ¥58,000.
If a part-time worker were to only receive the national pension in the future, it would likely be difficult for them to maintain their livelihood. The aim of encouraging more people to join the employees’ program and reducing the number receiving low benefits is understandable.
However, some people may be dissatisfied with the change because, in order to enroll in the employees’ program, they will have to pay for the premiums. The government should provide detailed explanations of how much their future benefits will increase, among other merits, as a result of paying the premiums.
In addition, since the premiums for the employees’ program are split between employers and employees, the burden on small- and medium-sized companies that hire part-time workers should not be overlooked.
Large companies should take these circumstances into account and consider allowing subcontractors to pass on the increase in labor costs through such things as their delivery prices.
Meanwhile, the government separately attempted to stabilize the financially deteriorating national pension program by injecting reserves from the more financially sound employees’ pension program. However, the Liberal Democratic Party opposed this measure, arguing that “it would be difficult to gain the understanding of contributors to the employees’ program,” and the measure was ultimately removed from the bill.
Last year, the government also considered extending the period for paying pension premiums for the national program by five years, to 45 years, but decided against it due to concerns about possible opposition mostly from self-employed individuals.
If the decline in the number of people enrolled in the national program is left unaddressed, premium revenues will fall, and the level of the pension benefits receivable in 30 years is expected to be about 30% lower than the current level.
In addition, those in the so-called employment ice age generation, who could not find employment as regular employees after the collapse of the bubble economy and remain unable to enroll in the employees’ pension program, would receive benefits only from the national program.
The government cannot put off reform for fear of immediate criticism.
