Opinion

Money for nothing

By Scott T. Hards

In between all the news about U.S. President George W. Bush's great Iraq disaster, you might catch a few stories about attempts by Japanese politicians to pass legislation to reform the national pension system.

As it stands, the system is broken. Experts generally agree that people born after 1964 will pay more into the system than they'll get out of it. Part of the reason is the failure to accurately predict the aging of Japan's population. After World War II, there were about 11 working people for each pensioner. Now there are less than four, and that ratio continues to fall.

Many people aren't paying into the pension system either because they stand to lose money in the long run, are trying to save money today, or simply because they don't care (like the numerous politicians recently revealed to have not been paying).

Thirty-five percent of the payments due go uncollected, hurting the system's financial situation. This has led to a hike in the minimum age for payouts and other cutbacks. This, in turn, further lessens the appeal of the system and more people decide not to pay.

While lawmakers attempt to come up with a solution, I'd like to propose one of my own: Eliminate the pension system altogether. Let individuals plan for their own retirement and take financial responsibility for their own lives. It shouldn't be the government's job to hold everyone's hand and give them an allowance in their old age, especially when everyone knows they have to grow old eventually.

But of course, since millions of people depend on these payments for their daily lives, they cannot suddenly be shut off. But changes can be made so that people born after, say, 1986 will be ineligible to receive funds when they grow old. Of course, they won't have to make any payments into the system, either.

For people already working, a sliding scale can be developed: The older people already are, the more of the originally planned payments they should receive. After all, people in their 30s and 40s still have plenty of time to plan their retirements if they know now that they won't be getting much from the government.

In addition to this, more extensive tax breaks on bank and investment accounts can be introduced to encourage more and more people to save for themselves.

And most importantly, a meaningful crackdown can be started on those people who don't pay into the pension system. Right now, there are virtually no penalties and most people don't even get overdue notices! Even employers who aren't paying their premiums generally suffer little more than the occasional annoying visit from the social welfare office. No insurance plan can work if one-third of the premiums are never paid and if offenders are not even notified.

If Prime Minister Junichiro Koizumi is serious about moving bloated, inefficient government bureaucracies into the private sector, turning control of their retirement funds back to the people who paid them in the first place would be a great way to chop some of the fat.

Shukan ST: May 21, 2004

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