Japan set to implement pension payout cut for elderly workers


The Ministry of Health, Labour and Welfare of Japan is set to present the finalised criteria for reducing pension payout figures at a meeting of the Pension Working Group of the ministry’s Social Security Council on November 13. Setting the threshold at 510,000 yen or more in monthly wages and pension benefits, currently, the threshold is set at above 470,000 yen for pensioners aged 65 or above.

The ministry plans to promote discussions on the proposal at the government’s council on social security for all generations and within the ruling coalition parties, before submitting a bill to revise relevant laws to the regular session of the Diet next year.

The ministry had suggested last month that the figure be set at over 620,000 yen but the proposal came under fire for favouring high-income earners, prompting the ministry to reconsider the amount.

The system of reduced pension payouts for employees aged 65 or above was introduced based on the idea that elderly earners of incomes above certain levels should forbear some portions of their pension income. However, some in the government have criticized the scheme, saying it undermines the morale of potential elderly workers.

The proposed criteria were calculated based on an average monthly wage of 439,000 yen including bonuses that a male employee in the active labour force would earn, plus the average pension benefits for an active worker, with basic pension excluded. The calculation method is aimed at reassuring senior workers that their pension benefits would not be reduced even if they work like those in the active workforce and avoiding criticism by using average figures for wage and pension income.

The introduction of the new earnings criteria for old-age pensioners is estimated to cost several tens of billions of yen a year in additional expenditure.

Meanwhile, the ministry also plans to ease pension payout reductions for workers aged between 60 and 64, raising the income criteria to the same levels as employees aged 65 or above. Currently, the threshold for pension cuts for the first group is set at a combined 280,000 yen in monthly wage and pension earnings. (Source: The Mainichi Japan)