The Cabinet OK'd legislation Friday for presentation to the Diet the same day to establish a new pension services agency in 2008 to replace the Social Insurance Agency and enhance collection of pension premiums.

The bill is designed to implement the initiative for revamping pension services that the government started deliberating on in 2004 after the Social Insurance Agency came under fire for lax expense management and erroneous benefit disbursements.

The legislation proposes that the new pension body, to be called the Nenkin Services Agency, be established in October 2008 by inheriting the existing agency's basic plans for the national pension system and the separate employees' pension insurance system. "Nenkin" means pension in Japanese.

The current agency's health insurance service would be passed on to a national health insurance association to be established under separate legislation that has already been introduced to the ongoing Diet session.

Management decisions for the new body would be made by a panel consisting of the chief executive officer and up to four other members picked from among private-sector experts on pension affairs.

Former welfare ministry officials would be barred from joining the panel.

As a step to address nonpayments into the national pension plan, the legislation authorizes shortening the validity period of health insurance policy cards for those who have not paid due pension premiums.

Government officials say the measure will force people to visit municipal offices more frequently to renew their health insurance cards, giving local officials more opportunities to remind them to pay pension premiums.

Other steps for enhanced collection include allowing premium payments by credit card and enabling universities to collect payments from students.