The Ministry of Health, Labour and Welfare in Japan is preparing for a major reform of the public pension system, which is scheduled for next year. This reform is being driven by the country's aging population and falling birthrate.
The ministry has begun a financial verification of the public pension system, which is conducted every five years. This verification is known as a "health checkup" of the pension system. In this verification, the ministry produces estimates for future benefit and premium levels based on demographic and economic projections.
The previous review conducted in 2019 forecast that future benefit levels of the national pension would decline by as much as 30 percent as the population ages and shrinks.
The ministry is considering several options to increase benefit levels. One option is to extend the period when people contribute to the national pension by five years to a total of 45 years until they are 65 years old.
The ministry is also considering reviewing or scrapping the system that suspends benefit payments of the employees' pension if the wages of working people 65 or older exceed a certain level. This system has been criticized as discouraging elderly people from continuing to work.
The ministry is also considering covering part-time workers who meet certain requirements with the employees' pension and raising the ceiling of the standard monthly remuneration, which is used to determine employees' pension premiums.
The ministry will announce the results of the financial verification this summer. These results will be used for the pension system reform next year.