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Wednesday, Aug. 10, 2011
Pension collection rates falling
The premium-collection rate for the basic pension (kokumin nenkin) for fiscal 2010 was 59.3 percent, down from fiscal 2009's 59.98 percent and a record low. The rate has fallen below 60 percent for two consecutive years and has continued to tumble for five straight years.
The downward trend is linked to an increase in the number of temporary workers and unemployed people, with the payment of monthly premiums having apparently become impossible for many people, and growing distrust in the public pension system.
What is particularly worrisome is that the collection rate is low among young people — 47 percent for people aged 25 to 29 and 51 percent for people aged 30 to 34.
An increasing number of young people have been forced to take low-paying temporary jobs and the monthly premium of some ¥15,000 has become a great burden for them.
Kokumin nenkin was originally intended for covering self-employed people, who face no mandatory retirement regulations. But accounting for about 40 percent of total kokumin nenkin participants, temporary workers now outnumber the self-employed in the program.
One reason for the low collection rate is the government's inadequate public-relations efforts. It should explain to low-income people the importance of going through official channels to have their premiums reduced or to get exempted from premiums payments. If they go through the procedure and are exempted from premiums payments, they still will be entitled to half the normal kokumin nenkin benefits because half of the benefit is covered by tax money.
To increase the collection rate, the government should introduce a system under which temporary workers will move from the kokumin nenkin system to the kosei nenkin pension system, which is mainly designed for permanent corporate workers.
In this system, premiums are paid in accordance with workers' income, and workers and employers each pay half the premiums.
The government also should shorten the period of years in which people have to continue to pay premiums to become eligible for receiving pension benefits from the current 25 years.