Reconsideration on Pension Reform

The Liberal Democratic Party (LDP) and Komeito reached a deal with the Constitutional Democratic Party of Japan (CDPJ) on revision of pension reform bill, which was submitted to the Diet by the LDP earlier this month. Although the LDP dropped a provision to increase basic benefit from its own bill, the ruling party effectively revived it in the revised bill, accepting request of CDPJ. There are political considerations behind LDP’s unusual concession on pension reform.

After a long deliberation, the LDP submitted pension reform bill on May 16th, two month later than originally planned. The party once considered to include a provision that would enable to use a fund in employee’s pension insurance, which had been accumulated for salaried workers, to maintain benefits of National Pension System (NPS) for mainly business owners. But the LDP dropped it, being afraid of criticisms from salaried workers about appropriation of their fund.

 

However, leading coalition of the LDP and Komeito does not have majority votes in the Lower House to pass the bill. While they need approval for the bill some of the opposition parties, most of them were against LDP’s idea to drop the provision. The opposition parties demand some measures to support benefits of NPS, which is supposed to be reduced in the future, to help “employment ice agers” who graduated college in 1990s and 2000s with less job opportunities than other generations.

 

It was the CDPJ, the biggest opposition party, that embarked on negotiation with the leading coalition in the Diet. Its leader, Yoshihiko Noda, appealed to the public by criticizing LDP bill with a metaphor that the bill was “red bean roll without red bean paste.” Acknowledging large interest of the people in pension reform, it is likely that the CDPJ hoped to achieve a political gain in pension reform before the election of Upper House in July.

 

The LDP basically accepted the idea of the CDPJ. They agreed on including a clause in additional provisions of the bill, which describes taking measure of appropriating employee’s pension insurance fund for the NPS in next revision of pension system scheduled in 2029. In short, they made a deal to help the employment ice agers but it will be four years later.

 

The LDP has been in a dilemma: helping the ice agers or taking care of salaried workers. Upper House lawmakers in the LDP welcome the deal with CDPJ, because they can appeal their effort to help the ice agers in the coming election campaign. The LDP also expects that CDPJ will refrain from submitting non-confidence resolution against Prime Minister Shigeru Ishiba to the Diet.

 

The Democratic Party for the People takes a stance close to the LDP on political donation reform, and Japan Innovation Party cooperates with the leading coalition over revision of Japan Science Council Act. The CDPJ is trying not to have wider distance from other opposition parties by making a policy deal with the LDP, before another opposition party joins the leading coalition on pension reform.

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