Governmentt to tap pension system reserve fund

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Government to tap pension system reserve fund

Yomiuri Shimbun, Daily Yomiuri

August 19, 2003

The government will dip into the reserve fund of the public pension system to maintain payment of benefits equivalent to more than 50 percent of the average income for active workers, Health, Labor and Welfare Minister Chikara Sakaguchi said Sunday.

Sakaguchi said in a program on NHK television that starting in 2004, the fund reserve will fall to a level barely enough to pay pension benefits for just one year in 2100.

Such drastic action is necessary to pay pensioners benefits equivalent to at least 50 percent, preferably 55 percent, of the earnings of an average salaried worker, the minister said. He was referring to the public pension system reform scheduled for 2004.

"More and more people in the postwar baby-boom generation are becoming eligible for pensions," Sakaguchi said.

He went on to say that children of those people will become pensioners around 2050.

To cover the massive amount of pension payments to a large number of postwar baby boomers and their children, he said, the government will have to tap into the pension reserve funds.

In fiscal 2002, the government spent 44 trillion yen to pay for pensions.

This means the current funds are enough to pay for the coming three years, but not for four years.

Sakaguchi's remarks indicated his intention to take a new look at his ministry's proposal, unveiled in December, in which experts called for the need to maintain current levels of pension reserve funds into the future.

In the same TV program, he said the government can increase its share in the spending for maintaining the basic pension plan only if the tax system is revised so as to create necessary funds.