May 24, 2011
A government panel for welfare reform on May 23 laid out an agenda to cut the amount of pension benefits in proportion to an increase in the number of elderly people under the situation of falling prices.
The panel also proposes that the government consider a further rise in the eligible age for the start of pension benefits using a mid-to-long-term perspective.
Even the previous government could not implement a cut in pension payments at a time of price decline along with the so-called microeconomic slide formula.
The Liberal Democratic-Komei Party government first introduced the formula in 2004 in order to adjust the amount of pension payments in line with the increase of an aging population and a declining birthrate.
However, in fear of public criticism, it restricted the exercise of the macroeconomics-linked pension payments to only when wages and prices rise.
Since this system was adopted, consumer prices and wages have continued to decline, so the welfare ministry has not been able to carry the measure to cut the pension payments by a larger percentage than the rate of falling prices into effect.
The Japan Business Federation (Nippon Keidanren) has called for the pension adjustment to be put into motion together with a rise in the eligible age at a time of declining prices so that its member companies can share a smaller burden for the pension program.
The panel’s consideration of exercising the microeconomic slide formula appeared in response to the business circle’s demand.
The panel also proposes that the government consider a further rise in the eligible age for the start of pension benefits using a mid-to-long-term perspective.
Even the previous government could not implement a cut in pension payments at a time of price decline along with the so-called microeconomic slide formula.
The Liberal Democratic-Komei Party government first introduced the formula in 2004 in order to adjust the amount of pension payments in line with the increase of an aging population and a declining birthrate.
However, in fear of public criticism, it restricted the exercise of the macroeconomics-linked pension payments to only when wages and prices rise.
Since this system was adopted, consumer prices and wages have continued to decline, so the welfare ministry has not been able to carry the measure to cut the pension payments by a larger percentage than the rate of falling prices into effect.
The Japan Business Federation (Nippon Keidanren) has called for the pension adjustment to be put into motion together with a rise in the eligible age at a time of declining prices so that its member companies can share a smaller burden for the pension program.
The panel’s consideration of exercising the microeconomic slide formula appeared in response to the business circle’s demand.
