On Friday, the Japanese government approved a long-awaited bill to reform the country’s pension system. The legislation aims to expand coverage for part-time workers and employees at smaller companies. Under the proposed changes, the “kosei nenkin” employee pension program would be extended to part-time workers earning less than ¥1.06 million ($7,300) annually and those working for companies with fewer than 51 employees.
These workers are covered only by the basic “kiso nenkin” pension program. Prime Minister Shigeru Ishiba’s Cabinet adopted the bill after lengthy internal discussions and resistance from within the ruling Liberal Democratic Party. The legislation is set to enter parliamentary deliberations next week.
Japanese pension system reforms approved
The reform bill also seeks to allow more elderly people to receive their full pension benefits while continuing to work. Additionally, it includes measures to raise the upper limit on pension premiums paid by high-income earners and eliminate the gender gap in the survivor’s pension program.
However, the government decided against including a proposal to use public and reserve funds from the “kosei nenkin” program to increase benefits under the basic pension program by about 30%. This decision was made due to opposition from the ruling party. The bill’s submission had been delayed by two months, with concerns about its potential negative impact on the Liberal Democratic Party in the upcoming House of Councillors election this summer.
Prime Minister Ishiba intended to submit the bill this week, stating, “We have in mind a schedule like the one you just mentioned so that the Diet can fully discuss it.”
The proposed pension system reforms are seen as a critical step towards securing financial stability for part-time and small business workers in Japan, reflecting the increasing number of non-traditional employment arrangements in the country.