A Call for a Withdrawal of the “Higher Premiums, Lower Benefits and No Radical Reform” Pension Reform Package
10 February 2004
- The Cabinet today endorsed and submitted to the Diet a package of bills to reform the pension system. However, the package postpones a radical reform of the pension system that is now suffering from the further hallowing out, but goes ahead with “reduced benefits and increased premiums”. It is merely a play balancing the books, increasing the pertaining distrust to the system. RENGO does call for a withdrawal of the pension reform package of “Higher Premiums, Lower Benefits and No Radical Reform”.
- The package does not touch upon at all a means to overcome of the hallowing out of the basic pension plan that has been considered the biggest challenge to overcome the distrust to the system. A raise in the government’s financial burden to support the basic pension plan to half, the expanded coverage of the employees’ pension plan so as to cover part-time workers, and the reform or curtailment of the pension plan for tertiary insured people (dependent spouses of salaried workers) have been also postponed.
In particular, the increase in the government’s share of basic pension premiums would be postponed by fiscal 2009, breaking the promise made to the people. It has been proposed to abolish the current fixed-rate tax cuts as the resource, which will lead to a drastic increased burden on the people in addition to the rise in premiums and then adversely affect the economy. RENGO does object to the abolition of the fixed-rate tax cuts.
- As regards burden and benefit, the package introduces fixed-level premiums and the indexation to macro economies, which is not however an effective means. The upper limit of employees’ pension plan premiums, which are now levied at 13.58 percent of annual income, would be fixed at 18.3 percent in fiscal 2017, after being raised by 0.354 percentage point every year beginning this year. Benefit levels would be cut down sharply by 15 percentages from current 59.4 percent to 50.2 percent of average income. However, further increase in premiums and decrease in benefits would be unavoidable in the absence of a radical reform, with the worsened hallowing out and declining birth rate, depending on the performance of pension fund investments. Thus, neither “fixed premiums” nor “50 percent benefit levels” can be reliable or obtain the people’s support at all.
- RENGO has been proposing a radical pension reform, including by funding the basic pension plan with taxes, toward the establishment of a sustainable, reliable pension system. Such reform would maintain benefits at the current levels even with 15-percent-premiums. The government must withdraw its plan to “increase premiums and reduce benefits without a radical reform” and make every possible effort to exhaustively discuss the subject with the people at large towards a radical pension reform.
We socially commit ourselves to mobilising all resources and going ahead with the national-wide movement toward a radical reform of the pension system. We will move forward against the government and the ruling parties by organising activities in workplaces, public awareness campaigns, national rallies on 30 March and a general action at the peak of Diet debate, in cooperation with opposition parties, including the Democratic Party of Japan national.