November 21, 2012

The welfare ministry’s latest survey shows that around three quarters of the Japanese population are worried about their future. However, the government has been cutting pension benefits without a care for their concerns.

Taking advantage of the confusion associated with dissolving the Lower House, the governing Democratic Party of Japan and the opposition Liberal Democratic, Komei, and Nippon Ishin no Kai parties on November 16 railroaded through the bill to cut pension benefits by 2.5%. Namely, the national pension benefits will be reduced by about 20,000 yen a year and the yearly welfare pension benefits will be cut by about 70,000 yen for a couple currently receiving 230,000 yen per month. These parties rammed the bill through with just a 5-hour discussion in the Diet.

About 60% of old-age pensioners receive less than 1.5 million yen a year. An old couple living in Hanno City, Saitama Prefecture, receives a pension of 250,000 yen a month. Their annual income has been reduced by 280,000 yen over the past 10 years due to successive raises in taxes such as the income tax, resident tax, and health and nursing care insurance premiums. The cuts actually exceed the monthly pension payment. The man and wife said that any further reduction is “intolerable”.

In the 2009 general election campaign, the DPJ pledged to establish a minimum pension system providing all recipients with 70,000 yen a month. After taking power, on the contrary, it slashed benefits in cahoots with the LDP and Komei party.

Acting head of the Nippon Ishin no Kai Hashimoto Toru showed his hostility towards the pension system, stating, “Japan will be ruined by the social security system.”

On the other hand, the Japanese Communist Party has proposed creating a reliable pension program in two phases.

According to the JCP proposal, at the first stage, the 2.5% cut of benefits will be stopped. And the pension eligibility period will be shortened to 10 years from the current 25 years. The state will supply eligible persons with a minimum pension of 33,000 yen a month, plus additional benefits depending on the length of premium payment.

At the second stage, all the people, including ineligible ones, will be eligible for 50,000 yen in minimum benefits and more in proportion to the amount of premiums they paid.

The party argues that the cost for this program can be covered by eliminating wasteful national spending, revising preferential tax measures for the rich and big businesses, and promoting progressive income taxation.