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Pension Reforms in Japan

Author

Listed:
  • Kenichiro Kashiwase
  • Mr. Masahiro Nozaki
  • Kiichi Tokuoka

Abstract

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.

Suggested Citation

  • Kenichiro Kashiwase & Mr. Masahiro Nozaki & Kiichi Tokuoka, 2012. "Pension Reforms in Japan," IMF Working Papers 2012/285, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2012/285
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    References listed on IDEAS

    as
    1. Kiichi Tokuoka, 2012. "Intergenerational Implications of Fiscal Consolidation in Japan," IMF Working Papers 2012/197, International Monetary Fund.
    2. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1.
    3. Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, vol. 88(2), pages 158-163, May.
    4. Ms. Joana Pereira & Mr. Philippe D Karam & Mr. Dirk V Muir & Ms. Anita Tuladhar, 2010. "Macroeconomic Effects of Public Pension Reforms," IMF Working Papers 2010/297, International Monetary Fund.
    5. Boris Cournède & Frédéric Gonand, 2006. "Restoring Fiscal Sustainability in the Euro Area: Raise Taxes or Curb Spending?," OECD Economics Department Working Papers 520, OECD Publishing.
    6. repec:dau:papers:123456789/11047 is not listed on IDEAS
    7. Jens Matthias Arnold, 2008. "Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 643, OECD Publishing.
    8. Alicia H. Munnell & Mauricio Soto & Alex Golub-Sass, 2008. "Will People Be Healthy Enough to Work Longer?," Working Papers, Center for Retirement Research at Boston College wp2008-11, Center for Retirement Research, revised Aug 2008.
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    Citations

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    Cited by:

    1. Randall S. Jones & Satoshi Urasawa, 2013. "Restoring Japan's Fiscal Sustainability," OECD Economics Department Working Papers 1050, OECD Publishing.
    2. Ms. Elif C Arbatli Saxegaard & Mr. Csaba Feher & Mr. Jack J Ree & Ikuo Saito & Mauricio Soto, 2016. "Automatic Adjustment Mechanisms in Asian Pension Systems?," IMF Working Papers 2016/242, International Monetary Fund.
    3. Yugo Koshima, 2019. "Japan's Public Sector Balance Sheet," IMF Working Papers 2019/212, International Monetary Fund.
    4. Heller, Peter S., 2015. "The Challenge of an Aged Population: Lessons to be drawn from Japan's Experience," CIS Discussion paper series 651, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    5. Kitao, Sagiri, 2015. "Pension reform and individual retirement accounts in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 111-126.
    6. Nozaki, Masahiro & Kashiwase, Kenichiro & Saito, Ikuo, 2017. "Health spending in Japan: Macro-fiscal implications and reform options," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 156-171.
    7. Randall S. Jones & Kohei Fukawa, 2015. "Achieving Fiscal Consolidation while Promoting Social Cohesion in Japan," OECD Economics Department Working Papers 1262, OECD Publishing.
    8. Brieuc Monfort, 2015. "Can Increased Public Expenditure Efficiency Contribute to the Consolidation of Public Finances in Japan?," Working Papers halshs-01548620, HAL.
    9. Mr. Masahiro Nozaki & Kenichiro Kashiwase & Ikuo Saito, 2014. "Health Spending in Japan: Macro-Fiscal Implications and Reform Options," IMF Working Papers 2014/142, International Monetary Fund.

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