Noriyuki Takayama

Closing the Coverage Gap : The Role of Social Pensions and Other Retirement Income Transfers

The book has four specific objectives: (a) to discuss the role of retirement income transfers in the context of a strategy for expanding old- age income security and preventing poverty among the elderly; (b) to take stock of international experience with the design and implementation of these programs; (c) to identify key policy issues that need to receive attention during the design and implementation phases; and (d) to offer some preliminary policy recommendations and propose next steps. The chapter one discusses the rationale for retirement income transfers. The main justifications are the limited coverage of the mandatory pension systems (chapter two) and the risk of poverty during old age (chapter three). Chapter four then examines the rights, based approach to expansion of social security coverage based on the conventions and recommendations of the International Labor Organization (ILO). The middle part of the book deals with international experience. Chapters five, six, and seven reviews selected programs in low-income, middle-income, and high-income countries, respectively, and chapters eight and nine discuss in greater depth the cases of Japan and the Republic of Korea. The five concluding chapters are concerned with policy issues as related to design. Chapter ten presents a typology of retirement income transfers and analyzes the potential economic impacts of the programs. Chapter eleven deals with financing mechanisms and the problem of allocative efficiency, given limited resources. Chapter twelve addresses two key issues related to institutional arrangements and targeting systems: Should countries consider separate programs to target the elderly poor instead of using the general social assistance system to target all poor? And, how can current proxy means-test systems be adapted to target the elderly poor? Chapter thirteen explores in more detail the links between social pensions and matching contributions in the context of a general strategy for expanding coverage. Finally, chapter fourteen provides guidelines for the design of the administrative systems needed to operationalize the various programs. The remainder of this overview summarizes the main messages from the subsequent chapters and outlines an agenda for future research and policy analysis. For clarity, it starts by presenting some definitions pertinent to the retirement income transfers discussed in the book.

Household Savings and Wealth Distribution in Japan

Publisher Summary This chapter focuses on the household savings and wealth distribution in Japan, explaining saving rates by income class and the construction of social-security wealth. In the National Survey of Family Income and Expenditure (NSFIE), gross yearly income includes wages and salaries, income through business and work at home, returns from assets, social-security benefits, donations, and consumption in kind. Japans saving rate is not as high as is commonly thought. The accumulation of wealth by Japanese households starts very early and lasts until very late in life, with unconsumed wealth transferred to the next generation in the form of bequests. Motivation for the acquisition of owner-occupied housing remains strong, and this promotes high saving, especially because of limited mortgage markets and high down-payment requirements. The most discussed data problem with the NSFIE is the sample selection bias with old households.

Pension Reform in Japan at the Turn of the Century

Changes in the social security pension system have thus far been made at least every ®ve years in Japan. Such frequent changes are considered to be ®ne tunings resulting from the rapidly changing socio-economic circumstances. Because a major overhaul was proposed in 1994, the chances were that 1999 would become another year of pension reform. In December 1998, the Japanese government decided to temporarily freeze increases in social security contribution rates for pensions for some years from ®scal year 1999 (beginning 1 April). This freeze was mainly due to the ongoing downturn of the Japanese economy. Also, in December 1998, the government decided to increase existing pension bene®ts in ®scal year 1999 to re ect only changes in the CPI over the previous calendar year, though ®scal year 1999 was previously anticipated as seeing net wage indexation of existing pension bene®ts after a ®ve-year interval. In July 1999, the government submitted the 1999 pension reform bill to the parliament, which it passed in March 2000. The aim of this article is to explain the main content of the 1999 pension reform, with some discussion of it. There has been a growing emphasis on the area of private pensions in Japan. The Japanese government recently proposed a newly de®ned contribution plan, along with amending the existing de®ned bene®t plans of occupational pensions. The reform bills concerned were passed by the parliament in June 2001. This article also explains the main points of these reforms in private pensions.

How to Make the Japanese Public Pension System Reliable and Workable

This paper has two objectives. The first is to identify current problems in Japans pension administration. The chief problem is a weak governance structure. In particular, the current governance structure ignores the role of pension participants. A rigorous division and clear assignment of responsibilities to each of the pension participants, the Social Insurance Agency, and the Ministry of Health, Labor and Welfare is urgently needed. Given rapid demographic change, the second objective is to consider the case for full tax financing of the National Basic Pension. It is estimated that the net burden would vary across different cohorts, but we demonstrate that the net burden can be smoothed across different cohorts. This result is quite different from that in the 2008 Interim Report of the Japanese National Council on Social Security.

Japan’s never–ending social security reforms

This paper examines implications of the 2002 population projections for future trends in pension and healthcare costs in Japan. Current redistributive pension and healthcare programmes have resulted in considerably higher per capita income for the aged than the non-aged population. Substantive reforms are needed to lessen the extent of such redistribution, but political considerations have meant that only incremental reforms have been feasible. A start, however, has been made on introducing private initiatives in pensions; and shifting from the command and control model operated by the central government to a contracting model for healthcare.

Social Security Pensions and Intergenerational Equity: The Japanese Case

Japan already has the oldest population in the world. It built a generous social security pension programme, but since 2001 the income surplus of the principal pension programme has turned into a deficit, and from then until the 2004 reforms, its balance sheet, which showed a huge excess of liabilities, engendered a growing distrust of the government’s commitment on pensions. The Japanese have been increasingly concerned with the incentive-compatibility problem.

Early Lessons from Country Experience with Matching Contribution Schemes

Matching defined contribution schemes are gaining popularity in both rich and poor countries as a promising means to reduce gaps in the participation in formal pension systems.

Pension Provision for Specific Risk Groups: The Japanese Case

The growing variety of possibilities in one life course raises coverage, fairness and social adequacy questions about existing public pension provision. This paper examines problems of drop-out, full-time housewives, carers, divorced or remarried people and those engaged in atypical work in Japan. A possible solution will be a universal basic pension financed by a consumption-based tax. It is also advisable to expand social security coverage of the earnings-related pension to any earners irrespective of their earnings amount, if any. In implementing this provision, an integrated single social security pension number for each person is required, and this has already been introduced in Japan. The 1999 government reform plan for pensions is also mentioned.

Social Security Pensions in Japan: A Balance Sheet Approach

Japan is experiencing a rapid ageing of its population with a subsequent strain on its social security pensions. Despite periodic reforms over recent decades and comprehensive reforms in 2004, many outstanding issues remain. Using the balance sheet approach we show that despite its recent reforms, Japans social security pensions face substantial excess liabilities. As well, the reforms themselves may have exacerbated the incentive-compatibility problem.

The Distribution of Assets in Japan

The economic growth of postwar Japan has been examined and analyzed from a number of perspectives. Among the most recent studies are some that critically review the growth-first policy in connection with the question of equitable distribution of income.