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2018.06.15

【Aging, safety net and fiscal crisis in Japan】No.130: The National Pension System is a Pie in the Sky

In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.

In Column No.32, I pointed out that the premium payment rate of the national pension has been sluggish and is now less than 70%. In May 2018, the Ministry of Health, Labor, and Welfare released new data on this issue.

The national pension is a basic pension system that all registered citizens of Japan aged between 20 and 59 years must subscribe to and pay the required premiums for, irrespective of their nationality. The number of national pension subscribers was 67.31 million at the end of March 2017. Among them, 15.54 million people - who are neither welfare pension subscribers, nor are their spouses - were obligated to join the national pension system. Furthermore, 5.83 million of the 15.54 million were exempt from insurance premiums, or their insurance premiums were suspended due to their low-income or student status.

According to the ministry, this premium exemption percentage increased from 37.5% (=5.83/15.54) in 2016 to 38.7% in 2017 (Figure 1). In addition, among the 9.71 million (= 15.54-5.83) obligated to pay national pension premiums, the percentage of subscribers paying in accordance with the stipulated time limit was 65.5% in 2017. This means that there are 6.36 million people (= 9.71 X 0.655) who pay the premiums in accordance with the law, out of the 15.54 million subscribers. In Okinawa Prefecture, the percentage of national pension subscribers who received a premium exemption is 54.4%, and the payment rate of subscribers (45.6%=100%-54.5%) who are obligated to pay premiums is 47.9%. In other words, among the national pension subscribers in Okinawa Prefecture, the percentage of people who pay insurance premiums in accordance with the law is only 21.8% (= 45.6% X 0.479).


Figure 1: Percentage of national pension subscribers who are exempt from insurance premiums
130-fig1.png

Source: Ministry of Health, Labor, and Welfare



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