February 14, 2012

CANARY IN THE COAL MINE:

Japan's Welfare Ministry Proposes Means Testing State Pensions (Stephen Harner, 2/14/12, Forbes)

On February 14 the Ministry of Health, Labor, and Welfare (MHLW) formally proposed to the quasi-government committee interfacing with the Diet a "means testing" fiscal reform plan for Japan's national pension system (equivalent to U.S. Social Security).   The plan calls for limiting maximum benefits to persons with annual incomes of JPY 8,500,000 (USD 110,000) or less.  Above this income level, up to an annual income of JPY 13,000,000 (USD 169,000) benefits would be gradually reduced by half.

As for funding, MHLW not surprisingly endorses the Noda government proposal (which also came from the bureaucracy) to raise the consumption tax from the current 5 percent to 10 percent in two steps by October 2015, calling for passage of enabling legislation in the current Diet session.

Boldly, the MHLW reform proposes that the means testing and cuts in benefit payments apply not just to future pension recipients, but also to current ones.  An estimated 243,000 current recipients would be affected.
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Posted by at February 14, 2012 4:39 PM
  

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