Japan's Lower House Passes Pension Reform Bill (Update1)

Articles: Japan's Lower House Passes Pension Reform Bill (Update1)

Posted by admin on Tuesday, May 11, 2004 - 04:08 AM

May 11 (Bloomberg) -- Japan's lower house of parliament approved a bill that will force workers to pay more into the nation's public pension system and slash retirement benefits.
Lower house approval assures implementation of the bill's provisions because the upper house, which will debate the changes next, has power only to delay legislation. Passage of the pension revisions, devised to prevent a drain on public finances as the country's population ages, comes amid a scandal involving skipped pension payments by Cabinet ministers and other lawmakers. ``It decreases people's incentives to pay contributions,'' Kazuhiko Nishizawa, an economist specializing in pensions at the Japan Research Institute, said in an e-mailed message. ``Many people probably think that if even politicians don't pay, it is natural that ordinary people don't pay.'' Naoto Kan, leader of the main opposition Democratic Party of Japan, quit his post yesterday after admitting he missed pension payments for 10 months in 1996. That followed the resignation Friday of Yasuo Fukuda as the government's chief spokesman. Six other Cabinet ministers have announced they missed pension payments: Finance Minister Sadakazu Tanigaki, Heizo Takenaka, minister for financial services, Taro Aso, the home affairs minister, Shigeru Ishiba, the defense minister, Shoichi Nakagawa, the trade minister and Toshimitsu Motegi, in charge of affairs related to the southern island of Okinawa and Japan's northernmost islands. Prime Minister Junichiro Koizumi wants to raise the combined contribution of workers and employers to 18.3 of wages by 2017, with higher premiums for part-time and self-employed workers who pay into a separate system. About 40 percent of part-timers currently do not contribute, according to Japan Research's Nishizawa. The government also plans to slash pension payouts to about 50 percent of nationwide average wages from 59 percent, in a bid to ease the strain on public funds as an estimated one in three Japanese will be 65 or older by 2025 from about one in five now. The DPJ, which will contest nationwide elections against the ruling Liberal Democratic Party in July, has yet to name a new leader. Kan earlier this month agreed to cooperate with the government on pension reform in return for a government promise to review reforms by March 2007 and consider unifying several pension system that are now operated separately.

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