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Pension Reforms in Japan

Author/Editor: Kenichiro Kashiwase | Masahiro Nozaki | Kiichi Tokuoka
Authorized for Distribution: December 4, 2012
Electronic Access: Free Full Text (PDF file size is 1,312KB)
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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.
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Series: Working Paper No. 12/285
Subject(s): Pension reforms | Japan | Social security | Government expenditures | Fiscal consolidation
    Published:   December 4, 2012        
    ISBN/ISSN:   9781475544312/1018-5941   Format:   Paper
    Stock No:   WPIEA2012285   Pages:   21
    Price:   US$18.00
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