Upper House passes pension reform bill

December 15 , 2016

On December 14, the House of Councilors passed the Pension Reform Act by a majority vote. Under the new law, national pension program contributors will pay lower premiums in a stagnant economy and higher premiums during economic upswings. The “reverse-sync” system will go into effect from 2021.

Another revision, effective from 2018, will hold down pension payouts according to the pace with which the birthrate declines and the elderly population increases. Known as the “macroeconomic slide,” the system will not only retain the existing cap on payouts during a deflationary cycle in which the cost of living and wages are lower, but carry the amount capped over a full fiscal year or more and add that to whatever payout gain that results during an economic upswing.

Under the new law, pregnant women would be exempt from contributing to the National Pension Plan for two months before and two months after giving birth. It would also allow temporary workers hired at smaller businesses with less than 500 employees to join a corporate pension program as long as labor and management agree.