Japan: Fiscal panel urges review of pension benefits

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Japan: Fiscal panel urges review of pension benefits

Daily Yomiuri

June 6, 2003

Japan - Cuts in pension benefits to both current and future beneficiaries may be considered to alleviate the deteriorating financial health of the public pension scheme, according to an outline of a report made by an advisory panel to Finance Minister Masajuro Shiokawa.

The Fiscal System Council will submit the report Monday to the finance minister. The measure forms part of a set of proposals concerning the compilation of the fiscal 2004 budget, according to the outline obtained by The Yomiuri Shimbun.

The report marks the first time the council has specified the need to study a reduction in the level of pension benefits, including those paid to current beneficiaries. Raising workers' pension contributions is seen as inevitable to maintain the public pension system.

By lowering the current level of pension payments, the council hopes to reduce inequities between generations and improve the pension system's finances, according to sources.

The council also calls for a full-scale review of government spending on science and technology, which have enjoyed ample budgetary allocations in the past. It also recommends reductions in public expenditure on research and development in such fields as nuclear power, marine and space development, according to the outline.

On the other hand, the council proposes increased budgetary allocations on priority areas including telecommunications, the environment and nanotechnology, with the aim of increasing the efficiency of R&D.

The Council on Economic and Fiscal Policy, which is chaired by Prime Minister Junichiro Koizumi, plans to draw up basic policies on the economy and fiscal management as well as structural reforms based on the council's report.