Passage of Pension System Bills: Don’t Let Latest Legislation Become the End Point of Needed Reforms

Editorial

15:04 JST, June 17, 2025

With the nation’s birth rate continuing to decline, the enactment of legislation to increase the number of people who support the public pension system can be called a step forward.

However, there are many social security issues that have been postponed. Without tackling reforms that will increase the cost borne by the public, the system cannot be expected to remain stable.

The bills related to pension system reform, which were among the important pieces of legislation in the current Diet session, have been passed into law by a majority comprising three political parties: the Liberal Democratic Party, Komeito and the Constitutional Democratic Party of Japan.

The centerpiece of the related law is a requirement for part-time workers to join the employees’ pension program in principle. The aim is to increase the number of participants in the program and stabilize the fiscal condition of the employees’ pension system. The advantage for part-time workers is that the amount of benefits they will receive in the future will increase.

Currently, part-time workers eligible to be enrolled in the employees’ pension program are those with an annual income of at least ¥1.06 million who work at least 20 hours per week for a company with at least 51 employees.

The related law will eliminate the annual income requirement within three years, but the working-hours requirement will be maintained. The requirement for the number of employees will be phased out, and 10 years from now it will become mandatory for part-time workers to join the employees’ pension program regardless of company size.

As the premiums for the employees’ pension program are shared equally by labor and management, it is possible that increasing the number of workers joining the program will raise the burden on the company side. A situation must be avoided in which small businesses run into financial difficulty. It is essential to consider measures to ease the burden on the company side.

Meanwhile, a measure to utilize part of the reserve funds of the employees’ pension program, which is the second tier of the public pension system, for the basic pension program — the first tier of the public pension system — was postponed. Instead, it was merely specified in the supplementary provisions of the related law that the government will decide whether to implement the measure based on the results of a financial verification of the pension system to be conducted in 2029.

The government initially intended to raise the amount of benefits for the basic pension program, also known as the national pension program, by using the reserve funds. However, as the ruling parties were wary of criticism that the measure would divert funds from the employees’ pension system, the measure was removed from the government’s bills.

But then, since the CDPJ demanded that the measure be implemented, the three parties agreed to revise the related bills.

The amount of basic pension benefits will likely fall by about 30% in the future compared to the current amounts due to deteriorating fiscal conditions. Do the ruling and opposition parties intend to leave such a situation unaddressed until the next financial verification of the pension system?

The social security system, which is in dire need of reform, is not limited to the pension programs.

During the current Diet session, a review of the high-cost medical expense benefit system, which is designed to reduce the burden on patients when their co-payments become large, was discussed. However, a conclusion was postponed until after the House of Councillors election due to criticism from patient groups and opposition parties that the review would make patients more reluctant to seek medical care.

Social security reform should not be used as a “political football.” The ruling and opposition parties should discuss the issues from a broader perspective.

(From The Yomiuri Shimbun, June 17, 2025)