Photo/Illutration This document states the pension amount the individual is to receive for the year. (Atsuko Hatayama)

Drastic changes in the national pension system are in the cards under plans being weighed by the welfare ministry to grapple with the ramifications of a faster decline in the birthrate.

One change would extend the period in which national pension premiums are paid from the current 40 years to 45 years.

The measure is designed to deal with the rapid graying of the population and decline in the birthrate that was exacerbated by the novel coronavirus pandemic. The number of births hit a record low of 811,622 in 2021 and the figure may well fall under 800,000 this year.

Officials explained that if the situation is left unchecked, the amount of basic pension paid in the future will have to be cut because there would be fewer working people forced to shoulder the burden of an expanding group of pensioners.

Everyone in Japan between the ages of 20 and 59 is required to pay basic pension premiums for 40 years in order to receive full benefits. But the pension amounts alone are not nearly enough to survive. Monthly payments in fiscal 2022 to an individual who had paid premiums for the entire 40 years amount to only 64,816 yen ($444).

Company employees and civil servants have their own pension programs through which they receive an additional pension upon retirement.

The current basic pension premium is 16,590 yen a month. Those who only have the basic pension to rely on, such as the self-employed, short-term workers and the unemployed, will have to pay the premium for an additional five years.

Company workers who remain on the job until 70 will not have to shoulder an additional burden since they are required to pay premiums for their corporate pension programs if they continue working until just before their 70th birthday.

Past estimates projected a major drop in basic pensions paid out in the future.

The most recent study in 2019 found that pensions for company employees would, in 30 years, be about 20 percent lower than the level in fiscal 2019. Basic premiums were projected to decline by 30 percent over the same period.

Various factors will have to be addressed, not the least of which is the expected backlash from those required to pay premiums for five more years. Extending the premium period to 45 years will also increase the amount of basic pension that will have to be paid out, placing a burden on public finances as half of the sum is covered by government funds.

The national pension program is reviewed every five years and the next revision is scheduled for 2024. The government intends to seek legal revisions in 2025 to extend the premium period.

Another proposal being considered by the ministry would raise maximum premium levels paid by those aged 75 and older for their national health insurance.

The measure would affect those who are relatively well-off.

Premiums for those aged 75 and older are based on annual income and there is a yearly cap on premiums of 660,000 yen, but the measure being considered by health ministry officials would raise the limit to 680,000 yen.

Ministry officials are seeking to revise the law to implement the change in the ordinary Diet session scheduled to convene in January.

Another measure being considered would call on those aged 75 and older to gradually increase the amount they pay for medical care out of their own pockets.

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