Japan's protracted economic slump, combined with the accelerated aging of the population, is putting increasing strains on the public pension system. The government-managed corporate-sector pension program, which now has 30 million subscribers, registered a large deficit in fiscal 2001. For the first time since the current system started in 1954, annual expenditures surpassed revenue.
The deficit, which amounted to nearly 700 billion yen, is worrying because it reflects a continuing deterioration, not just a temporary decline, in public pension finances. The government is primarily responsible for this. The system is updated every five years, but so far drastic reform has been avoided. The next quinquennial review, scheduled for 2004, may be the last chance to restructure the crumbling program.
The Ministry of Health, Labor and Welfare gives three direct causes for the deficit: a drop in the number of subscribers, an increase in the number of pensioners and shrinking investment returns on pension reserves. Indirectly, the revenue shortfall reflects the expansion of the elderly population and the anemic growth of the economy.