Only 27% of young people in their early 20s pay national pension premiums

   The rate of young people in their 20s who actually pay national pension premiums dropped to 26.9 percent in FY 2006, according to data recently released by the Social Insurance Agency. This data shows a deep distrust of the public pension system.

   When those who are exempted from premium payment or granted delayed payment are counted in as persons in arrears, the actual rate of payment as a whole was 49 percent. In the lower age brackets, the rate dropped further.

   The insured of the National Pension Plan is currently required to pay 14,100 yen of premium a month irrespective of their income level. The premium will go up by 280 yen per month every year until 2017.

   Moreover, the insured must continue to pay the amount of premiums for more than 25 years to be eligible for benefits. An insured person can receive no benefits, even if he or she has paid premiums for 24 years and 11 months. This is a key factor that contributes to the low rate among young people. A large number of people have become reluctant to pay premiums because they are not sure if they can afford to pay premiums for such a long time.

   Japanese Communist Party Secretariat Head Ichida Tadayoshi in his interpellation in the House of Councilors plenary session on October 5 proposed that the minimum required premium payment period be shortened at least to ten years.

   Prime Minister Fukuda Yasuo, however, refused this proposal, stating, “It would encourage people to stop paying premiums and thus increase the number of pensioners with low benefits.”

   Japan’s period to be eligible for pension benefits (25 years) is abnormally long compared to the United States (10 years), Germany (five years), Sweden (three years), and France (three months).

   During the House of Councilors election, even then Liberal Democratic Party Policy Research Council Chair Nakagawa Shoichi said, “We must discuss whether the period of 25 years is appropriate.” Ota Akihiro, chief representative of the Komei Party, LDP’s ruling coalition partner, also said, “There is enough room to take into account the opinion that the period of 25 years is too long and the period needs to be shortened.”

   If they turn their back on shortening the period, it will only help increase public distrust of the pension system.                                             - Akahata, October 14, 2007