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HOME  > Past issues  > 2019 July 17 - 23  > What is pension reserve of 192.7 trillion yen for?
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2019 July 17 - 23 [ECONOMY]

What is pension reserve of 192.7 trillion yen for?

July 19, 2019

Japan’s public pension funds accumulated reserve funds of 192.7 trillion yen as of March 2018 and 80% of the money came from the national pension and employees’ pension funds.

Pension consultant Kawamura Kenkichi pointed out that there is no need for the government to hold such a huge amount of reserves because the public pension program is operated on a pay-as-you-go basis, that is, benefits are paid to pensioners by using funds from premiums collected from the working-age population at the same time and not by using reserves accumulated in the past. Of course, a pension fund needs to have some reserves to pay benefits, but the amount held in reserve is usually not so large in other countries. The public pension funds in France has almost no reserve. Britain and Germany have reserves enough to pay pension benefits for a few months, Kawamura said.

However, in Japan, the government has built up a large amount of pension reserves under the pretext of preparing for a further greying of the population. In reality, the government has long used the reserve funds for political purposes. The money has been used to implement public works projects and is now invested in stocks to boost corporate share prices.

It is a deception to try to give the impression that if the public pension funds make profits from stock investment, it will reduce premium rates or provide higher benefits. Capital gains have never been used to increase benefit payments.

In the first place, cuts in pension benefits and the accumulation of pension reserves lead to a smaller disposable income for the general public and a slowing economy. In addition, higher stock prices will only benefit a handful of rich people.

The Japanese Communist Party proposes that the government put a stop to the speculative investment of pension funds and draw on pension reserves in order to secure money necessary to abolish the macroeconomic slide system. This proposal serves the public interest, Kawamura said.

Past related articles:
> Japan’s public pension fund records largest-ever loss of 15 trillion yen under Abenomics [February 2, 2019]
> Abenomics actually manipulation of stock market [October 19, 2017]
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