Approval of pension system reform law How will it change? What are the challenges? May 29, 12:53

A pension system reform-related law was enacted at the plenary session of the House of Councilors on the 29th, which aims to ease the conditions for participation so that short-time workers working part-time can easily join the welfare pension.

The bill related to the reform of the pension system was voted at the plenary session of the House of Councilors on the 29th, and was approved and passed by a majority of the parties, including the Constitutional Democratic Party, the National Democratic Party, and the Japan Restoration Party, in addition to the LDP and Komeito parties.

According to the law, as a low pension measure for short-time workers who work part-time, etc., in order to make it easier to join the welfare pension, the company size requirement in the enrollment conditions is from current employees "501 or more" to "51 or more". It will be gradually reduced to and the scope of application will be expanded.

In addition, in order to encourage employment even after the age of 60, the "employee old age pension" system reduces the pension of the elderly who work and has a certain income, and the standard amount of income for which the pension of people aged 60 to 64 is reduced. The monthly fee will be raised from 280,000 yen to 470,000 yen.

In addition, we will expand the range of pension starting age options, which are currently between 60 and 70, to 75.

This revision will address diversifying work styles and expanding employment opportunities for the elderly, and will aim to increase supporters to stabilize pension finance. The main part of the law will come into force again next April.

How will the pension system change

How will the pension system change? The main changes.

1 Scope of welfare pension expanded

Many of the short-time workers who work as part-time workers do not join the welfare pension that employees, etc. join, and there are some who are worried about their life after retirement if they do not receive enough pension in the future.

For this reason, in order to make it easier for short-time workers to join the welfare pension plan, we will gradually reduce the requirements of company size, which is currently required to work for a company with more than 501 employees. ..

In October 2022, the number will be reduced to "101 or more" and in October 2024 to "51 or more" in two stages. Since half of the insurance premium will be borne by the company, it has been gradually reduced in consideration of the small and medium-sized enterprises, which have an increasing burden.

If you select "101 or more", there will be 450,000 new people. When set to "51 or more," it is estimated that 650,000 will be applied.

There is also the aim to link low pension measures to people with non-regular employment in the so-called "working ice age" generation.

2 Review of old-age pension

The “Old-age pension” is a mechanism to reduce the pension of the elderly who work and have a certain income, but it has been pointed out that it is discouraging the elderly to work.

For this reason, for people aged 60 to 64, the standard amount of income for which the pension will be reduced will be raised from the current monthly 280,000 yen to 470,000 yen.

On the other hand, for people over the age of 65, the ruling party has said that it will be preferential treatment for high-income earners, and there has been a series of cautious debates on raising it.

3 Starting age of payment Expanding the range of options to 75 years old

The age at which the pension starts to be received can now be freely chosen between the ages of 60 and 70.

With the expansion of employment opportunities for the elderly, we will expand the range of options for the age at which people start receiving benefits up to age 75, and will be able to choose between the ages of 60 and 75.

The pension will decrease by 0.4% per month if you start receiving before the age of 65, while it will increase by 0.7% per month if you start receiving after 65.

If you start receiving at the age of 75, you will increase your annual wage by 84% compared to the age of 65.

4 Easy to use "iDeCo"

It becomes easier to use "individual type" defined contribution pension = "iDeCo" which is added to the public pension.

While the maximum enrollment period for those under the age of 60 is extended to under the age of 65, the options for the age at which to start receiving benefits from the ages of 60 to 70 are expanded to 75.

Also, procedures such as application will be available online.

Furthermore, if a company employee who has a “corporate” defined contribution pension plan wishes, he / she will be able to join “iDeCo” without the agreement of labor and management.

When used in combination with "enterprise type", the total premium is 55,000 yen per month, of which "iDeCo" can be freely combined up to 20,000 yen per month.

“IDeCo” has the advantage that tax premiums and operational gains are tax-free, and we aim to have the asset formation in old age.

The remaining issues

The pension system still has some challenges.

“Further expansion of application”

Whether to further expand the coverage of the employee pension.
In the process of discussions for this revision, it is said that "employees should, in principle, allow all people to join the welfare pension," and that the enterprise-scale requirements themselves should be abolished. Many were issued.

If it is abolished, it means that 1.25 million people will be newly applied.

In this revision, the abolition was abandoned in consideration of the side of companies that increase the burden of insurance premiums, but further expansion of application is likely to be a subject for further study.

"Enhancement of basic pension"

Last year's “Financial verification”, which shows the future benefit level of public pensions, showed that the future benefit level of the “basic pension” is significantly lower than that of the welfare pension.

At the Diet session, both the ruling and opposition parties expressed their concerns and demanded that countermeasures be taken, and the incidental resolution included necessary consideration in the future.

In order to raise the level of the "basic pension", the plan to extend the coverage period of the national pension, which is up to 60 years old to 65 years, to 45 years was also considered, but this time it was postponed. ..

It has been pointed out that half of the financial resources of the “basic pension” will be covered by the national treasury, which is tax, and that extension of the membership period should be discussed together with the tax increase.

“Influence of new corona”

In the Diet debate, the impact of the spread of the new coronavirus on the pension system was also discussed.

With this revision, the types of industries that expand the application of welfare pensions and increase the burden of insurance premiums on companies include inns and restaurant chains. In many of these industries, management is struggling due to the new coronavirus.

For this reason, some argued that the schedule for relaxing the requirements should be delayed, but the plan was left as it was, as workers needed to secure pensions. It is necessary to keep an eye on the company, which will increase the burden.

Last year's financial verification showed that if the economy grew steadily, it could maintain a benefit level of 50% or more of the average income of the working generation.

However, it has been pointed out that the setting of the "economic growth rate", which is the premise of the calculation, may have changed because the spread of the new coronavirus infection has a great impact on the Japanese economy and the world economy. It was

Some say that the economic impact will last for years. How to maintain pension finance to protect the security of the active generation after retirement will continue to be a major issue.