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A Proposal for Redesigning Social Security: Long-Term Care Pension

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  • Shuji Tanaka

    (College of Humanities and Sciences, Nihon University, 3-25-40 Sakurajosui, Setagaya-ku, Tokyo 156-8550, Japan)

Abstract

I propose to replace the automatic adjustment system of pension benefits, embedded in the 2004 reform of the Japanese public pension scheme, with one providing for specific required care levels and thus assure the logical financial adjustment of long-term care insurance and public pensions. For this purpose, I introduce a multi-state Markov chain model and estimate the transition matrix combining the existent local experience data and nationwide public data. The following policy effect will be anticipated. If an LTCI beneficiary falls into a certain required care status, his or her required care benefit will need to be upgraded and the individual expense burden will increase. A similar approach is proposed by annuity products in the private sector such as the QLAC (qualified longevity annuity contract) in the U.S. and “life care pensions” in Britain.

Suggested Citation

  • Shuji Tanaka, 2016. "A Proposal for Redesigning Social Security: Long-Term Care Pension," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(1), pages 98-117, January.
    • Handle: RePEc:pal:gpprii:v:41:y:2016:i:1:p:98-117
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    Citations

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    Cited by:

    1. William Lim & Gaurav Khemka & David Pitt & Bridget Browne, 2019. "A method for calculating the implied no-recovery three-state transition matrix using observable population mortality incidence and disability prevalence rates among the elderly," Journal of Population Research, Springer, vol. 36(3), pages 245-282, September.
    2. Manuel Ventura-Marco & Carlos Vidal-Meliá & Juan Manuel Pérez-Salamero González, 2022. "Life care annuities to help couples cope with the cost of long-term care," Documentos de Trabajo del ICAE 2022-03, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    3. Kato, Ryuta Ray, 2018. "The future prospect of the long-term care insurance in Japan," Japan and the World Economy, Elsevier, vol. 47(C), pages 1-17.

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