Japanese Employees ’ Pension Insurance: Issues for reform

Population aging due to low fertility and increased longevity has a strong impact on public retirement programs. The Japanese public pension system was reformed in March 2000. Due to the rapid deterioration of the insured-beneficiary relation in the near future, however, the Japanese system is still forced to reestablish its long-term financial stability. The purposes of this paper are 1) to describe the characteristics of the Japanese Employees ’ Pension Insurance (EPI) with some references to the German system, and 2) to discuss issues important for the future of the EPI. The first proposal for the next public pension reform was made public by the Government in December 2002, and we believe that it is very important to consider all possible options in the Japanese pension reform discussion. 1. Introduction1 The entire working population has been covered by the public pension system since 1961 in Japan. Historically, it has been a Japanese characteristic to treat employees and non-employees, such as the self-employed or farm