Pension Reforms in Japan

By Kenichiro Kashiwase, Masahiro Nozaki, Kiichi Tokuoka

December 4, 2012

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Kenichiro Kashiwase, Masahiro Nozaki, and Kiichi Tokuoka. Pension Reforms in Japan, (USA: International Monetary Fund, 2012) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes various reform options for Japan’s public pension in light of large fiscal consolidation needs of the country. The most attractive option is to increase the pension eligibility age in line with high and rising life expectancy. This would have a positive effect on long-run economic growth and would be relatively fair in sharing the burden of fiscal adjustment between younger and older generations. Other attractive options include better targeting by “clawing back” a small portion of pension benefits from wealthy retirees, reducing preferential tax treatment of pension benefit incomes, and collecting contributions from dependent spouses of employees, who are currently eligible for pension benefits even though they make no contributions. These options, if implemented concurrently, could reduce the government annual subsidy and the government deficit by up to 1¼ percent of GDP by 2020.

Subject: Aging, Expenditure, Income, Labor, National accounts, Pension reform, Pension spending, Pensions, Population and demographics

Keywords: Aging, Contribution rate, Eligibility age, Fiscal policy, Global, Income, Japan, Pension, Pension benefit, Pension reform, Pension spending, Pension system, Pensions, Replacement rate, Replacement ratio, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/285
Stock No:

WPIEA2012285
ISBN:

9781475544312
ISSN:

1018-5941

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