Comments on the Pension Working Party’s proposal

12 September 2003

Tadayoshi Kusano
General Secretary

  1. Today, the Pension Working Party of the Ministry’s Social Security Advisory Council published “the report on pension reform”. The report carries opinions of both sides on crucial issues concerning benefits and premiums, pension for housewives, a tax-based system, etc. However, the issues were not well deliberated and the report is just a result of following the Council’s timetable. Lacking concrete measures, the report has not taken shape yet.

  2. As regards benefits and premiums, the report states that it is appropriate to introduce a “fixed-premiums and fluctuating-benefits system”, with a supplementary note as Rengo’s opinion: “Such system will reduce the level of benefits and citizens’ distrust will increase. It should not be introduced”. Furthermore, the report does not address the problem of Kokumin Nenkin (for self-employed and unemployed citizens) that 40% of the people who should be paying Kokumin Nenkin are not doing so, while saying “a tax-based system will be a crucial issue at the next review”. Concerning Class 3 Insured (dependent spouses of salaried workers), the report says members agreed on cuts in Class 3 benefits, but does not indicate concrete measures. Lastly, the Council did not spend sufficient time to discuss transparency in the size of the Pension reserve fund and the management of the fund.

  3. The Ministry of Welfare, Labour and Health will formulate the gist of a revision bill on the basis of the report and Minister’ proposals that were earlier published, which will then become a Government bill after ironing out differences among the ruling parties by the end of the year. However, the report does not discuss sufficiently many important issues and does not reflect the reality of what citizens feel in their daily lives. The final governmental bill should be based on a broader consensus following sufficient discussions with ruling and opposition parties, as well as representatives of beneficiaries themselves.

    The governmental bill must, with a view to improve the reliability of the pension system, include concrete measures concerning: - the increase of the portion paid out of the National Treasury up to 50% (currently 33.3%) and resources; - a tax-based system to finance Kokumin Nenkin; and – measures to maintain the current level of benefits.

  4. Rengo has been suggesting that, with a view to establishing the pension system by all for all, the basic pension be financed by tax. The tax-based system would maintain the current benefit level with premiums into Kosei Nenkin (for company employees) rated only 15% of their salaries. Rengo will continue working on the establishment of a secure and reliable pension system.