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2019.05.08

【Aging, safety net and fiscal crisis in Japan】No.185: Extend the cover of welfare pension and raise the age at which pension payment starts

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.45, I explained the overall picture of the pension system in Japan. Welfare pension is for employees in private companies and public organizations. The government aims to raise the start age for receiving pension benefits while extending the cover of welfare pension to part-time employees to stabilize the pension system's finances under aging and population decline.


Table 1 shows the relation between working hours and applicability of welfare pension. Of the group working 20 to 30 hours per week, 4,100,000 employees are not covered under the welfare pension. The government is expected to set the conditions for this group for getting covered under it in the next reform.


The standard start age for receiving pension is 65, but individuals can set their own between 60 and 70. Table 2 shows the rate by which the pension amount is reduced if the start age is before 65 and the rate by which it is raised if the start age is after 65. According to the Ministry, the number of people who chose to keep their pension start age after 65 is just about 1%.


Table 1 Relation between working hours and applicability of welfare pension

185-table1.png

Source: Ministry of Health, Labour and Welfare


Table 2 Relation between the start age for receiving pension and pension amount

185-table2.png

Source: Ministry of Health, Labour and Welfare


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