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Japan govt adopts pension system reform plan

  • March 3, 2020
  • , Jiji Press , 12:27 p.m.
  • English Press

Tokyo, March 3 (Jiji Press)–The Japanese government decided Tuesday to reform the pension system to expand the range of part-time workers who can join the “kosei nenkin” public pension program for corporate employees.

The measure is aimed at increasing the number of people, especially women and elderly workers who tend to take on part-time jobs, paying into the system.

The proposal, approved at a cabinet meeting, will gradually expand the eligibility of part-time workers and other short-term workers for the pension program.

Those working at companies with workforces of 101 or more will be subject to the kosei nenkin system from October 2022, while those at companies with 51 or more workers will become eligible from October 2024. Currently, the workforce requirement stands at 501 or more.

The revision is expected to lead to an increase of some 650,000 in the number of workers participating in the pension program.

The move may put the crunch on the management of small companies, as half of workers’ premiums are paid by employers under the system.

The government will also review its system of reducing pension payments for high-income elderly workers in fiscal 2022, in light of an increase in the number of elderly people continuing to work.

Currently, elderly workers aged between 60 and 64 are subject to benefit reductions if their wages and pensions together exceed 280,000 yen per month. The government plans to raise the income threshold to 470,000 yen.

Additionally, the government will allow people to choose between age 60 and 75 to begin receiving pensions, raising the upper age limit from 70. The later people become pensioners, the higher their monthly benefits go.

A new system will be introduced to increase the amount of pensions for workers who continue to work and pay into the pension program at ages of 65 or older.

The age requirement for other pension systems will also be reviewed to reflect the reality of elderly workers.

The requirement for joining the corporate-type defined contribution pension system will be relaxed from under 65 to under 70, while the upper age limit for starting to receive pensions under the system will also be raised, from 70 to 75.

Similar changes will be made to rules for joining iDeCo, an individual-type defined contribution pension plan, in which self-employed people or company employees invest their own money.

In addition, the government plans to stop issuing new pension handbooks in favor of notices for basic pension numbers, as well as exempt unmarried single parents with low income from having to pay premiums for the “kokumin nenkin” national pension program for self-employed and other people.

 

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