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Thursday, April 16, 2009
Grimmer pension forecast released
The government will probably renege on its pledge to keep pension benefits in fiscal 2038 at a minimum of 50 percent of a worker's average income, a paper released Tuesday by the welfare ministry says.
Holding the line at 50 percent has been a key pledge by the government and Liberal Democratic Party-New Komeito ruling coalition.
The revised estimate is almost certain to draw fresh criticism from experts and opposition lawmakers, who have argued that the pension plan is based on overly optimistic assumptions.
In its scenario published in February, the ministry assumed an 80 percent compliance rate among all residents obliged to pay into the basic pension system in fiscal 2038.
This is far higher than the 65 percent paying into the system. If the trend continues, pensioners in 2038 will receive in benefits about 49 percent of the average income being made by working-age people in that year, the Health, Labor and Welfare Ministry admitted in a paper released to the press Tuesday.
The ministry did not reveal in February that the estimate was based on 80 percent compliance, ministry official Keisuke Menda told The Japan Times Wednesday. That figure is actually the Social Insurance Agency's compliance target.
In 2009, the ministry estimates the average pension for retirees who have paid into the "kosei-nenkin" corporate pension system will be ¥223,000, or 62.3 percent of the ¥358,000 average monthly after-tax income of working-age people. Part of the corporate pension system comes from the basic pension system.
Until 1996, the compliance figure was above 80 percent, but has fallen steadily amid a rapidly rising elderly population and a falling birthrate.
The ministry released the new estimates Tuesday after Democratic Party of Japan lawmakers questioned the reliability of the February figures.