Insurance executive Toshiyuki Sue, 59, has barely a year to go before he retires, and he cannot wait.

Having been with the same company all his life, his pension, plus his considerable savings, should assure him and his wife of a fairly comfortable retirement life.

Only that he cannot start collecting his pension until he reaches 65.
After leaving his present job, he can look for another one to sustain himself until then.

But he said: 'I have not yet decided what to do. Maybe I will take a rest first.'
With no children and his suburban home fully paid for, he has little to worry about.

Not so, however, for most Japanese workers, especially young people with a few more decades to go before they can hang up their boots.

The continual raising of premiums and lowering of benefits in Japan's public pension system have left many Japanese wondering how much they can expect to get when they retire.

The recent scandals of politicians being found to have not paid their compulsory premiums into the Kokumin Nenkin national pension scheme have only exacerbated those feelings.

Because there are a number of public pension schemes and members need to switch schemes when changing jobs or are temporarily out of work, many ordinary Japanese have also probably defaulted on their premiums at one time or another.

The fact is that Japan's public pension system is too complex for the average person to grasp.

'Most people barely understand the system, which is why licensed tax accountants can flourish,' said financial planner Yusuke Moriizumi.
Japan's public pension system comprises three schemes - Kosei Nenkin for salaried workers, Kyosai Nenkin for government officials and Kokumin Nenkin for everyone else - creating large inequities in benefits and premiums, which differ according to one's job and employment status.

The Kokumin Nenkin or national pension scheme, which was started in 1961 and is compulsory, provides only basic benefits and targets mainly the self-employed and the unemployed.

Its current maximum monthly benefit of 66,000 yen (S$1,000) is barely enough for one to make ends meet.

Of the 22 million Japanese who are supposed to participate in this scheme, one in three is either not enrolled or not paying his dues.

Among them, 5 million are exempted due to low or no income, such as university students.

The buildup of arrears is largely the fault of the Social Insurance Agency, the body that administers public pensions and which has been lackadaisical in its job.

Last year, the agency reportedly spent 14.5 billion yen on a collection exercise but managed to recover only 160 million yen of unpaid premiums, or only slightly above 1 per cent of the amount spent.

Surprisingly, even if defaulters want to pay all their arrears, existing law does not permit the government from collecting anything which is owed for more than two years. 

The feeling of most Japanese that their pension system is grossly unfair makes the picture more complicated.

For example, working women have to pay pension premiums, but the premiums of stay-at-home wives of corporate workers are taken care of by their husbands' Kosei Nenkin pension scheme.

The Kosei Nenkin, started in 1942, deducts income-linked premiums directly from workers' salaries, with employers contributing an equal amount, making corporate workers the envy of Japanese who are only qualified to join the basic compulsory pension scheme.

But both groups in turn envy bureaucrats and politicians as they are obviously getting the best deal of all.

The Kyosai Nenkin scheme for government officials - a legacy of a scheme begun in 1875 - sets premiums at only slightly higher than for corporate employees, but pays much higher benefits.

Meanwhile, lawmakers, by serving a minimum of 10 years, receive nearly 4 million yen a year in benefits, although they do pay higher premiums.

One dilemma facing the Japanese is that their pension system depends on the current generation of workers supporting an ever-growing number of retirees.
Currently, some 29 million people a year receive pensions totalling nearly 40 trillion yen.

While one retiree is supported by four workers at present, by 2050 it could be down to 1.5 workers as fewer and fewer babies are born.

Prime Minister Junichiro Koizumi promises pension reforms, but his proposals hardly go any further than past exercises and focus only on hiking premiums and cutting benefits.

But this time there is one exception - his reform Bills do set long-term numerical targets, raising premiums from the present 13.58 per cent of income to 18.3 per cent by 2017, and slashing benefits from 59.3 per cent to just over 50 per cent of average worker income in the same period.

But he has made no attempt to streamline the country's Byzantine pension system even though it is quite obvious, from the large number of Japanese who either consciously or carelessly neglect paying their premiums, that many things need to be fixed.

In a Kyodo News poll, nearly 68 per cent of people surveyed wanted Mr Koizu- mi's limited reforms shelved.

But he seems determined to have them approved by Parliament before it adjourns in the middle of next month.

In a last-minute bid to sweeten the pill, his ruling coalition wants to table another Bill allowing people to pay back their full arrears during a three-year amnesty.
But financial planner Moriizumi believes that it is more important to erase the sense of unfairness.

'For salaried workers, their pensions are deducted from their salaries, but for the self-employed or unemployed, pension payments are virtually voluntary because there is no punishment for defaulting,' he said.

People must be made to pay up so that the system will not go bust.

'With low birth rates and an ageing population, the pension system is becoming financially strained,' said Mr Moriizumi.

'The result is that people worry what will happen when it's time for them to retire. Young people are the most sceptical of all. 

'No wonder more and more people do not want to pay their premiums,' he added.

***

TODAY 

One retiree is supported by four workers, with some 29 million people a year receiving pensions totalling nearly 40 trillion yen (S$610 billion).

BY 2050 

With fewer and fewer babies being born, projections are that the ratio could go down to one retiree being supported by 1.5 workers.

THREE SCHEMES, ONE COMPLICATED SYSTEM 

Kokumin Nenkin 
This is the national pension scheme. It is compulsory, provides only basic benefits and targets mainly the self-employed and the unemployed. 

Kosei Nenkin 
This scheme deducts income-linked premiums directly from workers' salaries, with employers contributing an equal amount.
 
Kyosai Nenkin 
This scheme for government officials sets premiums at only slightly higher than for corporate employees but pays much higher benefits.