According to the Nihon Keizai Shimbun on Tuesday, the Ministry of Health, Labor and Welfare has decided to reduce the number of people eligible for the reduction by improving the “old-age pension” system, which cuts welfare pensions for senior citizens with a certain income. After coordinating with the ruling party, the ministry plans to submit a revision bill to the law to the regular session of parliament early next year.
The old-age pension system reduces welfare pensions when the combined wage and welfare pension exceed 500,000 yen per month. In 2022, when the standard amount was 470,000 yen, 500,000 people aged 65 or older were eligible, accounting for 16 percent of pensioners who work. In Japan, critics pointed out that the system discourages the elderly from working.
The Ministry of Health, Labor and Welfare is considering raising the standard amount for the reduction of the welfare pension from the current 500,000 yen to 620,000 yen or 710,000 yen. If the standard amount is raised, pension benefits for working seniors will increase accordingly. The employment rate for those in their late 60s in Japan rose from 38.7% in 2013 to 52.0% in 2023.
In order to stabilize the finances of the welfare pension, the government will also seek to increase the premium burden on high-income office workers. The measure is aimed at raising the premium ceiling. Workers and companies pay 18.3 percent of the “standard monthly remuneration,” which is divided into 32 stages depending on their monthly income. Currently, the upper limit of the standard monthly remuneration is 650,000 yen and the upper limit of the premium for workers is 59,000 yen per month.
Japan is suffering from a shortage of workers as the number of working-age population (15-64 years old) has declined sharply. The working-age population supporting economic growth stood at 73.95 million last year, down 256,000 from the previous year. The figure accounted for only 59.5 percent of the population. It lags behind the U.S. (64.7 percent) and China (68.9 percent).
SOPHIA KIM
US ASIA JOURNAL
