Govt May Ease Pension Criteria / Exemptions for Families, Automatic Premium Reductions Proposed

The Yomiuri Shimbun

September 28, 2008

Japan

The Health, Labor and Welfare Ministry plans to relax eligibility criteria for the receipt of public pension payouts, according to a draft of the reform plan obtained by The Yomiuri Shimbun. 

As part of the plan, the ministry is considering measures such as shortening the minimum premium payment period. 

To strengthen the public pension system and to secure minimum living standards for the public, the ministry also is considering options such as: 

-- Reducing premiums for low-income earners without requiring them to fill out applications. 

-- Shortening the minimum premium payment period for receipt of pension payouts from its current 25-year level. 

-- Reviewing the current age range in the program's requirement stipulating that those aged 20 to 60 not covered by other public pension plan must join the national pension plan. 

The ministry will submit the draft plan to a pension subpanel of its Social Security Council during a meeting Monday. 

The draft was prompted by the realization that some people are unable to pay national pension premiums due to low salaries during their working years, making them unable to receive their full pensions. 

Because of this, the ministry plans to reform the system to automatically reduce premiums in accordance with income levels. 

Though the current system can reduce or exempt premiums depending on income levels, people must undertake procedures to apply for the benefits themselves. 

Under the planned new system, benefit procedures will not be based on applications and premiums will be automatically deducted after income levels of public pension policyholders are checked by administrative offices. 

The ministry also suggests as an option a system be introduced to guarantee a minimum fixed pension payout. However, the ministry pointed out a possible controversy may emerge over whether it is appropriate to provide the same payout regardless of the length of time over which premiums were paid. 

Concerning a review of eligibility to receive basic pension payouts, a number of elderly people are ineligible to receive pensions. Their premium payments were in vain because they did not pay premiums for the full 25 years required to receive benefits. 

The ministry plans to shorten the minimum premium payment period to about 10 years so anyone can join public pension plan without excessive burdens. 

Currently, people aged 20 to 60 not covered by other public pension plan have to join the national pension scheme. The ministry plans to raise the upper age limit to 65 and allow people aged 25 or younger to be exempted from the obligation. 

The reason for including the moratorium in the plan is because many youths around age 22 do not earn steady incomes. In addition, the rate of people properly paying nation pension premiums is lowest among those in their 20s and higher among older people. 

The ministry plans to allow people aged 20 to 25 to choose whether to pay national pension premiums on their own. Their basic pension payouts will be increased if they paid the premiums when aged 20 to 25. 

As part of measures to prevent the nation's birthrate from further falling, the draft plan suggests considering a system to exempt couples raising small children from paying pension premiums for a certain period. 

Under the planned system, a couple can apply for an exemption to reduce economic burdens. The exemption period would count as a premium-paying period. 

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