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Sunday, May 27, 2012
Foundation for future pensions
The government has sent a bill to unify different pension systems for public servants and private school teachers, on one hand, and corporate workers, on the other. The Diet should thoroughly discuss the bill since it will lay a long-term foundation for the nation's pension system.
At present, the premium rate for the kosei nenkin pension system for corporate workers is 16.412 percent of their monthly wages. It is to be raised to 18.3 percent from September 2017. The rate for the kyosai nenkin pension systems for national and local public servants is now 15.862 percent. It is to be raised to the same 18.3 percent one year later. The rate for the kyosai nenkin system for private school teachers is now 13.292 percent. It is to be increased to the same 18.3 percent from April 2027.
Under the bill, the names of the different systems will be unified as the kosei nenkin system in October 2015. The eventual purpose is to create a system in which public servants, private school teachers and corporate workers pay the same amount of premiums and receive the same amount of pension benefits.
Currently the kyosai nenkin systems give an additional monthly benefit of about ¥20,000 on the average. No additional premium payment is required from public servants and private school teachers for them to receive this additional benefit. The bill will abolish this system. But the government envisages creating a new additional benefit system for public servants and private school teachers that will require them to pay an additional premium.
At present, if the spouse or children living on the survivor's pension of a deceased worker die, the spouse's parents or grandchildren inherit the right to receive the pension benefits. The new bill will abolish this system.
If current economic conditions continue, it will become difficult to secure the current level of pension benefits. The government must fully explain why it thinks the 18.3 percent premium rate is adequate. According to a government plan, of some ¥45 trillion funds accumulated by the kyosai nenkin systems, only about ¥24 trillion will be transferred to the kosei nenkin systems. The rest will be used to pay additional benefits to public servants and private school teachers. All funds should be transferred to the kosei nenkin system to assure payment of ordinary pension benefits.