Photo: Members were encouraged at the emergency rally, March 12.

Conditions regarding pension revision are growing tense. The Ministry of Health and Welfare set an aggressive schedule for bill submission in March and sent an inquiry to the Pension Council on the 12th. On March 15, the Council forced the submission of the report which "endorses" "the Pension System Reform Bill Outline."
RENGO, in protest of the Council's handling of the matter, held an urgent rally in front of Kasumigaseki Building where the meeting was held on March 12 to arouse three RENGO-endorsed members.
On the morning of March 15, RENGO endorsed its stance at the Expanded Tactic Committee suggesting that "[RENGO-endorsed members should] leave their seats if the report was forced through."
On the afternoon of the same day, after attending the urgent rally in the rain and expressing their determination to the council, the RENGO-endorsed members submitted the written opinion objecting the outline of the bill to the council. They expressed their intention that they cannot take responsibility for the report that endorses the outline of the bill, and withdrew form the council.
Those members and Secretary General Sasamori held a press conference to announce a protest statement. The next day GS Sasamori and the members visited Health and Welfare Vice-Minister Yamaguchi sharply protesting the handling of the council and the report that ignored RENGO's opinion, urging the Ministry to retract to the report. After Yamaguchi replied that they could not, GS Sasamori remarked that RENGO could not be held responsible and handed in the three members' resignation. In addition, the three RENGO-endorsed members of the Social Security Advisory Council boycotted the March 16 council held in response to the Pension Council's report.

I. Welfare (Old-Age) Pension/ National Pension

1. Reform of Pension Levels

(1) RENGO objects to lowering the multiplier for the remuneration-based portion of Employee Pension and objects to introducing legislation to stop income indexation after a ruling has been handed down.

The current system promises a future substitute ratio of about 55% of the yearly take-home pay.
If the cuts which this outline proposes were introduced, the ratio would drop to around 45%, which is close to the amount of the relief of the needy. The 55% substitute ratio is rather low compared to ILO levels and those of other countries. Take into account an expected increase in burden for seniors such as nursing care insurance premiums, a necessary requirement is to guarantee this level for the future generation of beneficiaries in order to secure the credibility of the public retirement pension system.

(2) RENGO objects to raising the eligibility age for the Old-Age Employees' Pension (remuneration-based portion of the Employees' Pension).

During the last reform, raising the eligibility age was discussed but eventually defeated. One of the reasons was the very bleak employment picture for people in their 60's, and a positive view of the concept of "partially employed/partially living on a pension" as a life style choice for one's golden years.
For an aging society to pave the way for shorter working hours (shorter workweek) is a significant problem that many seniors want to have for their work. The significance of the Old-Age Employees' Pension (the remuneration-based portion) or "separate benefits" has yet to manifest itself.
Introducing a raise in the eligibility age in these circumstances at a time when employment conditions for seniors are getting harder and harder, should never be admitted for it generates wide-scale anxiety over the basic juncture between pensions and employment.

(3) Reducing rates for early pension benefits.

A lingering problem from the last reform lies in adjusting reduction rates in relation to increased longevity. The rate has not been adjusted since the National Pension System was first started. Immediate revision is necessary before it becomes a problem in the 2001 fiscal year when raises in the eligibility age of the special provision (fixed portion) will be initiated. The fact that the "Outline" again delays revision despite the situation, is a serious defect that one cannot ignore.

(4) The Old-Age Pension System for Active Workers

The current system has vital problems such as an automatic 20% reduction of benefits if beneficiaries earned any amount of money no matter how small. Before introducing new measures for people in their late 60's who have jobs, we should correct the faults in the current system. In order to consider restrictions on public pension provisions given to high-income earners, the main issue is to directly face transferring "retirement pensions" into "Old-Age Pensions" with a mind to consolidate public pensions after correcting the faults in the current system.
Repeating system modification only to cut provisions without any analysis of the system itself, will only increase distortion in the entire system.

(5) Future Insurance Premium

When government liability on basic pensions is raised to one half, future premiums can be maintained on about 25% of one's monthly earnings (19.5% of one's entire earnings) in 2025 without restraining the profit level as shown in the Outline of the Bill. That would be possible if the profits from current reserve investments and the growing employment rate of women and seniors are factored in correctly. Furthermore, the premium would be about 18% (13.5% of one's entire earnings) if the basic pension were taxable.

2. Increasing government liability on basic pensions and future taxation.

(1) Increasing government liability to one half has been the question at issue ever since the last reform. It should be implemented immediately, while striving to make cuts in the premium (rate) by the same amount. Resources for that should be appropriated from the general account through administrative and financial reforms and not indirect tax increases. The article (1), "8. Defrayal" in the "Outline" runs counter to this and it is not in agreement with article (4). This is entirely unacceptable to RENGO.

(2) The increase of government liability should be positioned specifically as a transitional measure toward the basic pension's transfer to future taxation. This change is crucial from the standpoint of a "universal pension" to solve the following problems. 1) Hollowing out/cost increase in collecting premiums from beneficiaries as mentioned in Item 1 of the current system, 2) Divergent opinions on the beneficiaries as mentioned in Item 3 and 3) The treatment of students. "The Reform Bill Outline" avoids this option putting off the largest issue in the public pension system. The taxation formula is not something new, other countries have already introduced it. The Social Security Advisory Council in our country has already set forth a "Basic Pension" plan in 1977.

3. Exemption of Premiums during Maternity Leaves and Family-Care Leaves

RENGO agrees to a new measure that exempts the charges on the management premiums during maternity leave. Similar exemption measures should be installed for the charges to both labor and management during family-care leaves corresponding to family-care insurance, which is scheduled to be introduced in the 2000 fiscal year. It is a shame that "The Reform Bill Outline" neglects this issue which has been addressed by many members at previous meetings.

4. The Switch to a Comprehensive Earnings System

It is quite important, in light of assuring fairness of an effective burden ratio, to extend the burden from monthly earnings to annual total earnings including one-time payments. That is true if one takes into account actual conditions, the ratio of one-time payments (called "bonus" in the "Outline") in the total yearly wages that differ vastly by industry, size of business, and gender. In order to change the system, however, monthly earnings and bonuses must be treated equally and without distinction. To better articulate this point and bring it into focus, it is necessary to specify premium collection methods.