The Cabinet endorsed a package of bills Tuesday to reform the pension system and reinforce its sustainability.
Government officials said the package will be submitted to the Diet during the current session.
The upper limit of employee pension scheme premiums, equally shouldered by employees and employers, would be fixed at 18.3 percent of annual income in fiscal 2017, after being raised by 0.354 percentage point every year beginning in October. The premiums are now levied at 13.58 percent of income.
The amount of monthly premiums under the national pension plan, a separate system mainly for the self-employed, would be raised every year to a ceiling of 16,900 yen in fiscal 2017 from 13,300 yen at present.
The employee and national pension programs are managed by the government.
The package calls for the government to ensure that future pension benefit levels are kept at more than 50 percent of average take-home pay. The levels currently stand at an average of 59.4 percent.
The government's financial burden to support the pension system would be raised to half by fiscal 2009 from one-third at present.
Heated debate is expected in the Diet over the pension reform. The opposition Democratic Party of Japan plans to submit its own package calling for funding the government contribution to the pension system with income from the consumption tax.
The pension system is creaking under the weight of the country's aging population and declining birthrate. The question of how to balance premiums and benefits has been a core issue in the debate.