Need for a Comprehensive Reform of Old-Age Security in Japan

The 2004 pension reform in Japan introduced a mechanism to reduce the level of benefits corresponding to the decrease in the working population and the increase in average life expectancy, in addition to the scheduled rise in pension premiums. While these measures are expected to improve the financial sustainability of the pension system, they are also likely to aggravate the problems of inequality and poverty among the elderly. Concerns over this issue have led to policy discussions on the need for a minimum guarantee in pension benefits. The coalition government formed in 2009 and led by the Democratic Party of Japan developed a plan to introduce a minimum pension scheme, but the plan was not implemented. In light of these policy developments, this study explores the possibilities for a comprehensive but more targeted reform of old-age security to address inequality and poverty among the elderly.

First, this study analyzes citizens’ attitudes toward the pension system using national survey data. The data show that citizens tend to have high expectations of the social security system.

This study then examines the historical and institutional factors behind the problem of inequality and poverty among the elderly in Japan. It is argued here that a minimum pension scheme might not provide a feasible solution, and a comprehensive but more targeted reform of the different branches of social security system is needed.

Lastly, this study analyzes the employment situations of middle-aged and older workers. It is suggested that improvements in the employment policies for these workers should be prioritized, given their high work ethic and the financial difficulties of the public pension system.