【Aging, safety net and fiscal crisis in Japan】No.48: The National Pension Fund Has a Huge Shortage for the Required Reserve

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.

On the second layer of the national pension system is the National Pension Fund, a system that was established ahead of the Defined Contribution Pension (individual type) mentioned in column No. 47. This is a public pension based on the provisions of the National Pension Law. Its purpose is to boost older age income security for workers such as freelancers and the self-employed.

The biggest problem for the National Pension Fund is the huge shortage of required reserve for the pension payments. Unlike a corporate-defined benefit pension, there are no entities that replenish it. Thus, it seems likely that the shortage will be borne by all subscribers in the form of reduced annual amounts of pension benefits.

Figure 1 Financial situation of National Pension Fund


(Source)National Pension Fund Association

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