Parties Prepare for Pension Discussion

Shigeru Ishiba administration is preparing a bill for reforming pension system to current session of the Diet. Although Ministry of Health, Labour and Welfare (MHLW) planned to raise the basic pension benefits, the ministry gave up including related provision in the draft, receiving opposition from leading Liberal Democratic Party. Some LDP lawmakers are afraid of negative impact of pension reform on coming election of the House of Councillors.

National pension system in Japan is for the people in 65 years old or older, and basically consists of two layers: basic pension benefits and employee’s pension insurance. Basic pension benefits are equally distributed to all individuals, and employee’s pension insurance is provided to salaried workers of private sectors and government employees. Small business owners or low-income workers tend to depend on basic pension benefits.

 

Facing financial difficulty brought by demographic imbalance of highly aged society, the government plans to reduce pension benefit in the future along with the move of commodity prices. However, it was obvious that the people dependent on basic pension benefits will be affected by the reduction of benefits. The government proposed an idea that the fund for employee’s pension insurance would be consumed to make up for the reduction of basic pension benefits.

 

Some lawmakers in the LDP argued that the idea was misappropriation of the fund. It is likely that the people who are not dependent on basic pension benefits will be frustrated with the reform, because their fund in employee’s pension insurance will be reduced to help other people. The number of recipients of employee’s pension insurance is far greater than those who do not receive it.

 

The LDP put pressure the MHLW to exclude that reduction from the reform bill. However, the bill will not pass the Diet without support from opposition parties to achieve majority in the House of Representatives. Some opposition parties demand some measures to support basic pension benefit for “ice agers” of employment, who were born in between 1970 to 1983, suffering from burst of bubble economy in early 1990s when they graduated colleges.

 

The LDP has basically been reluctant to submit the reform bill in this Diet session. However, the opposition parties threatened Ishiba administration to submit it, indicating a possibility to pass a non-confident resolution against Minister of Health, Labour and Welfare, if the administration fails in submitting it.

 

Once the government submit the pension reform bill, it is inevitable that the bill brings a sharp opposition over the pension system. The LDP has historically been losing in elections right after pension discussion in the Diet. It is possible that the pension reform will be a major agenda in the last weeks of current ordinary session.

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