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Japan: Ministry Considers Minimum Pension


The Asahi Shimbun


 June 30, 2003

Japan - The  Ministry of Health, Labor and Welfare is to consider establishing a minimum level for pension payouts in an effort to improve confidence in the system and avoid payouts going into free fall.

The ministry is working toward ensuring a minimum level of pension payments equivalent to between 50 and 55 percent of the average net income of the active workforce. The figure currently is 59 percent.

It will also consider how to tackle the situation where, as a result of declining birthrates or economic conditions becoming worse than expected, the level of pension payments under the new plan falls below 50 percent.

Chikara Sakaguchi, Minister of Health, Labor and Welfare, directed that a minimum level for pensions be put in place. Prospects are that this will be reflected in the basic policy relating to pension payments and contributions, which is scheduled to be announced as early as August.

Behind the ministry's plan is its belief that, if an impression that pensions will ultimately be of little real value gathers momentum, young people will lose faith in the system.

There will also be a fresh calculation set out that-on the premise that the portion of base pensions provided from national coffers will increase from the current one-third to one-half-it will be necessary to have contribution levels of 19 to 20 percent if pension payments are to be maintained in the 50 percent of average net income range.

There is, however, a possibility that it will prove difficult for the ministry to work through such issues with the Council on Economic and Fiscal Policy and the Ministry of Finance, which advocate a slimming down of the pension system.

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