July 3, 2019

The “macroeconomic slide” mechanism which automatically slashes pension benefits will impose on non-regular workers, who are normally in low-paid and unstable employment, financial difficulties in their old age more severe than that shown in the Financial Service Agency’s controversial report on insufficient pension benefits.

After the second Abe administration was inaugurated in December 2012, more than three million people became non-regular workers. The proportion of such workers to the total workforce reached an all-time high. Three quarters of non-regular workers earn an annual income of less than two million yen.

Most people working in non-regular employment positions enroll in the mandatory National Pension (basic pension) insurance system under which they need to pay premiums for 40 years to get the full basic benefits of about 900,000 yen a year. On the other hand, those who work as regular workers will receive benefits from the national pension and employees’ pension schemes, totaling 1.89 million yen in average per year.

However, the amount of basic pension benefits will reportedly decrease from the current 65,000 yen to 45,000 yen in the future due to the government policy of using the “macroeconomic slide” scheme to suppress pension benefits in accordance with the aging and shrinking of the population.

The Japanese Communist Party has demanded the abolition of the “macroeconomic slide” system. In addition, arguing that the improvement of the employment situation will lead to a healthy pension finance which includes an increase in revenues from pension premiums, the JCP calls for increasing minimum wages drastically in order to push up the level of workers’ wages and for offering regular positions to non-regular workers.

With the FSA report pointing to the need for everyone to have 20 million yen saved for retirement, the issue of insufficient pension benefits surfaced as a key issue in the July 21 Upper House election.

Past related articles:
> Koike: Gov’t should abolish ‘macroeconomic slide’ mechanism and provide adequate basic pension benefits [June 19, 2019]
> PM Abe unable to attack JCP proposal for sustainable pension system: Shii [June 20, 2019]