The Japanese welfare ministry is gearing up for an important reform of the public pension system in response to challenges posed by the country's aging population and decreasing birthrate. During a recent meeting on April 16, members of the pension subcommittee of the Social Security Council engaged in discussions about the impending changes and the need for a comprehensive overhaul.
One of the key aspects of this reform involves a financial verification of the public pension system, which is conducted every five years to assess its sustainability and effectiveness. Known as a "health checkup" of the pension system, this verification process entails producing estimates for future benefit and premium levels, taking into account various factors such as demographic shifts and economic forecasts.
In light of the challenges posed by the aging population and shrinking workforce, the ministry council examined different scenarios to address the projected decline in future benefit levels of the national pension, which could potentially plummet by up to 30 percent. The upcoming reform aims to explore options for boosting benefit levels while ensuring financial sustainability, with council members expected to unveil their findings this summer in preparation for the reform to be implemented next year.
A proposed measure put forward by the ministry involves extending the period for individuals to contribute to the national pension by five years, making it a total of 45 years until the age of 65. This adjustment seeks to adapt to the changing demographic landscape and financial demands of the pension system, ensuring that benefits remain viable and adequate for retirees. Additionally, discussions at the meeting also touched upon potential revisions to existing pension policies, such as addressing the suspension of benefit payments for employees’ pension when the wages of working individuals aged 65 or older surpass a certain threshold.