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2008年12月 8日 (月)


2008/12/8 --The Asahi Shimbun, Dec. 6(IHT/Asahi: December 8,2008)

EDITORIAL: Stop pension waffling


Prime Minister Taro Aso has kept changing his tune about a scheduled hike in April in the ratio of state financing of basic pension benefits, leaving the public confused as to his real intentions.


At a news conference immediately after he took office in September, Aso said the change in pension funding would take place in April, calling it "a promise" by the government.

But on Dec. 4, he indicated his intention to delay the step to after the start of the fiscal year in April. "There will be no problem if we do it by the end of next fiscal year," he said. "We have to think about how to finance the step."


When he was questioned about the issue at the Diet the next day, however, Aso declared, "I have never said (the hike) will not be made in April."


The government is legally mandated to raise the ratio of state financing of basic pension payouts to one-half from the current one-third. An estimated 2.3 trillion to 2.5 trillion yen will be needed to finance the hike to implement the measure in April.


The question is how to raise the money. The government now has to take special measures to resuscitate the sagging economy amid rapidly dwindling tax revenue. In addition, it is under strong political pressure to increase spending from the ruling parties, which are concerned about their prospects in the looming Lower House election.


Behind Aso's flip-flopping is the fact that the government can reduce its financial burden by delaying the expansion of state funding for the public pension program, even by a few months.


But this measure is the core component of the pension overhaul the government decided on in 2004. The pension funding system was redesigned on the assumption that half of the money for basic benefits will come from state coffers no later than in April 2009.


Postponing this change with the result that the government contributions are less than promised, if only for several months, would leave a financing hole in the pension program.

If that hole is left unplugged, the pension system will eventually face the prospect of financial exhaustion, forcing the government to raise premiums more than planned or reduce benefits received by pensioners. Either way, the public will suffer.


The decision in 2004 was that the ratio of state financing must be raised "by fiscal 2009." The step should be taken before the beginning of fiscal 2009 in April.


It must not be forgotten that implementation has already been delayed to the last possible moment.


Past pension reforms were almost invariably marked by contribution increases and benefit cuts. As a result, the pension system has been compared to a "mirage."


This has fostered public distrust of the system. Many Japanese, especially young people, now suspect that they will not receive the promised pension benefits in full even if they pay the premiums as required.


The public's confidence in the pension system has hit rock bottom due to a string of scandals at the Social Insurance Agency, which is in charge of the program, including revelations about the falsifications of pension records.


If the government fails to honor its promise on funding of the program, what would the public reaction be? Is Aso clueless about how serious the situation is?


Increased public anxiety about the future would depress already weak consumer spending. Postponement of pension funding reform would only undermine the government's efforts to revive the economy, which Aso has described as his policy priority.


The administration's proposal to hand out 2 trillion yen in cash to households as part of a fiscal stimulus package has met with strong public criticism, with over 60 percent of people saying they don't want the money, according to media polls.


If it is difficult to find new money, the government should drop this unpopular proposal and use the savings to finance the promised change in pension funding.


Sacrificing an important reform of the social security system that is important to the public for a giveaway of taxpayer money would be an act of supreme political folly.


The government must not play politics with the all-important pension system.



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