The government has begun considering delaying the age at which people can choose to start receiving their pensions to after 70, with an expert panel at the Cabinet Office deciding to include the proposal within provisions to counter Japan's aging society.
Being able to work as long as one wants to will not only give workers a sense of purpose, but will also help stabilize financial resources to fund the nation's pension program. With its decreasing birthrate and aging population, Japan must think about methods to maintain its pension system.
To keep the system going, the only options are to increase the amount of premiums that the current generation is paying, or decrease the benefits that elderly people receive. This is why the premium rate for employees' pension plans to which company workers and civil servants belong was increased by 0.354 percent per year following reforms to the system in 2004. This month, the premium rate was raised to 18.3 percent, the maximum rate decided under reforms. This rate will thus become fixed.
As a result of the increase, the government will be required to make pension payments within the scope of premiums paid by the current working generation. Officials must think about increasing the number of people in plans by encouraging more part-timers and other workers to join employees' pension plans. It must also think about raising the age at which people can start receiving pensions across the board to prevent a sudden surge in the number of pension recipients.
The current system under which full-time housewives receive a basic pension even though they have not paid pension premiums has been criticized as unfair by women who work and pay premiums. Reforms in this area should be considered to secure resources to fund the pension program.
For several decades from now, Japan will likely see a declining birth rate and aging population. Even with the aforementioned measures in place, a decline in the level of pension payments will be unavoidable.
People in Japan can now receive pensions from the age of 65, but there are many people who still have plenty of energy after turning 65. Even if the age at which people can receive pensions is not increased uniformly, it is possible under the current system to decide to delay the start of pension payments to the age of 70. The expert panel at the Cabinet Office is talking about further extending that age beyond 70.
By delaying the age at which people start receiving pensions by one year, the amount received increases by about 8 percent. If people wait until 70, the amount they collect rises by 40 percent. For regular people, it is more advantageous to keep working than to manage their money.
If the age at which people start receiving their pensions is delayed, the period of time they receive a pension will become shorter. There is even a possibility that some people will die and not be able to receive a pension at all. But a pension is a type of insurance providing for the risks associated with living a long life. Healthy, motivated people should consider continuing their occupations without receiving pensions as another option.