The two ruling parties, the Liberal Democratic Party and New Komeito, earlier this week agreed on plans to shore up the faltering pension system for private-sector employees. The package calls for painful adjustments beginning in fiscal 2004: higher premium rates and lower benefit levels. What is missing is a well-calibrated, long-range strategy that provides a sense of security about life in retirement.

The agreement skirts most of the major problems facing the public pension system, particularly government fund shortages for basic pensions and massive arrears in national pension premiums. The primary reason for this seems to be a political one: With national elections coming up next year, the ruling coalition apparently wants to put off the more painful solutions, such as raising the consumption tax.

The package has three main features: First, the government's share of contributions to the basic pension program -- which forms the substructure of the employee pension system -- would be raised from one-third at present to one-half by fiscal 2009. Second, the premium rate would be increased gradually from the current 13.58 percent (which is split equally between employees and employers) to 18.35 percent over a period of 13 years. And third, benefit levels would be maintained at just above 50 percent (59 percent at present) of workers' prevailing average pay.