The Ministry of Health, Labor and Welfare Friday said it plans to abolish Japan's employee pension insurance system.
The Japanese pension system is mainly composed of national pension insurance, "kokumin nenkin" in Japanese, and employees' pension insurance, "kosei nenkin kikin." All residents of Japan aged between 20 and 60 are required to enrol in the national pension.
After a scandal in which pension funds placed in the hands of AIJ Investment Advisors Co vanished, the ministry set up a task force to deal with the financial problems faced by Japan's pension system. The task force proposed scrapping the employees' pension insurance system. Financial analysts say many employees' pension insurance system funds were AIJ customers.
At a press conference this week, senior vice welfare minister Yasuhiro Tsuji, who leads the task force, said the system is scheduled to be scrapped after a transitional period, Sankei Shimbun reported.
Employees' pension insurance system funds are corporate pension funds that also manage part of the state-run national pension insurance system. Many analysts believe the ministry's move is designed to address the plight of financially troubled national pension system funds.
The announcement comes after the Government Pension Investment Fund (GPIF) posted a negative return of 1.85% in April-June 2012, a loss of over 2 trillion yen. It was Japan's sixth biggest quarterly loss in terms of value since the GPIF began supervising pension money in 2001.
The GPIF reports that pension contributions have been falling short of pension payouts since the 2009/10 financial year.© Japan Today