- At a meeting of the Pension System Research Commission on December 2, the ruling Liberal Democratic Party adopted an outline for its pension system reform plan, in the form of a proposal by the commission's chairman, Mr. Takao Fujimoto, who is a member of the Lower House. The gist of the Fujimoto proposal was to phase out by fiscal 2025 the so-called partial pension, or the salary-linked portion of "kosei nenkin" pension benefits paid to corporate employees, which is currently paid beginning at the age of 60, thus raising the pensionable age to 65. It would also rise the pensionable age for the in-employment old-age pension scheme to 65, and at the same time cut the benefits under this scheme. The level of pension benefits would remain basically unchanged, at about 60% of the income received by those currently in employment (those who basically support the public pension system through their monthly contributions). The indexing of pensions to increases in disposable income of the current generation would be abolished, while the indexing to inflation would be retained. In short, the Fujimoto proposal follows the line of Option One of the pension reform plan, which was presented by the Ministry of Health and Welfare in late October. This original plan contained three different options designed to cut pension benefits in order to keep the lid on premium burdens.
- The Fujimoto proposal included a reference to the ratio of tax money to total pension payments proposing that it be raised from the present one third to one half by 2004, when the next five-yearly review of the financial aspects of the public pension system is scheduled to take place. ‚she Welfare Ministry's reform plan did not address this ratio. This measure would keep the final monthly premium amount to a level considerably below \20,000 a month for those covered only by the "kokumin nenkin" basic pension scheme. But it would lower the final premium rate, as a percentage of annual salaries, for "kosei nenkin"-covered corporate employees by a figure of about just one point from the rate of 20% (26% on a monthly salary basis) envisioned in the Welfare Ministry's reform plan. In this sense, it favors the kokumin nenkin group.
- The Japanese Trade Union Confederation (RENGO), along with other concerned organizations and pension experts, has argued for a full switch to a system of funding the basic pension (kokumin nenkin) scheme through tax money. However, the Fujimoto proposal failed to adopt this idea, thus failing to offer an effective approach to overcoming the structural problems inherent in the basic pension scheme, such as premiums in arrears. As a result of the abolition of the indexing to current-generation salaries, kosei nenkin pension benefits are estimated to decline to around 25% of the actual payments, according to figures provided under the Welfare Ministry's reform plan. This, coupled with the Fujimoto proposal's failure to specify which tax revenues should be used to raise the ratio of tax money to total pension payments, would not only fail to wipe out, but would even amplify, anxieties and distrust regarding the future viability of the public pension system.
- It is of particular concern that the Fujimoto proposal called for pushing back the pensionable age. Although on condition that the measure be implemented only after a sufficient transition period and in stages, at a time when measures for expanding employment opportunities for the elderly are failing to make progress, and when the situation is even worsening. Before making such a proposal, the LDP should clarify the concrete prospects for creating "a society where people are still in active service at the age of 65," as envisioned by the Fujimoto proposal. This must include measures to ensure expanded job opportunities and better terms for the elderly. The failure to do so would only aggravate the sense of insecurity about the future among middle-aged and elderly workers who are approaching retirement.
- The introduction of defined contribution pension plans, which also was not addressed by the Welfare Ministry's reform plan, is being put forward for the sole purpose of reducing the pension contribution burdens of employer corporations. The Fujimoto proposal's call for a temporary freeze on pension premium hikes is no more than a short-term attempt to avoid any further dampening of the sluggish economy. It lacks a comprehensive perspective on how to overhaul the public pension system, including what to do with the massive pension reserve funds.
- What has been offered by the Fujimoto proposal is not a blueprint for "an aging society full of vitality," but rather a scenario for a future of despair.
It is devoid of any plan for the "changes for the better" which will be necessary to provide the Japanese people with a strong sense of security and confidence. RENGO intends to furiously oppose the Fujimoto proposal's "changes for the worse."
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