The Political Economy of Pension Reform
Edited by Martin Rein and Winfried Schmähl
Chapter 2: The Relationship between the Role of the Corporate Pension and the Public Pension Plan in Japan
Yukiko M. Katsumata INTRODUCTION Two bills, the Deﬁned Contribution Corporate Pension Plan Act and the Deﬁned Beneﬁt Corporate Pension Plan Act, were passed in the 151st session of the Diet on 29 June 2001. The two bills had already been introduced to the Diet on 14 November 2000 and on 24 February 2001, respectively, and since then deliberations on both bills have been carried over to the next session. The reason why both bills related to the corporate pension plans have been introduced to the Diet one after another in 2001 is that corporate debt has been rising, owing to the introduction of new corporate accounting standards, and corporate proﬁts have decreased as a result of long-term Japanese economic stagnation. This chapter examines the role of the corporate pension in the context of the relationship between the history of the retirement allowance system and the public pension plan. Changes in the corporate pension in Japan resulted from internal and external corporation changes. The changes happening inside corporations suggest the end of the Japanese style lifetime employment system, as indicated by the high rate of actual unemployment, which is the highest since 1945. One of the external changes is the structural stagnation of the Japanese economy as represented by ultra-low interest rates and sluggish stock markets. Another external change is the current condition of the public pension plan, which is facing a lowering of beneﬁt levels from midand long-term perspectives, because of a drop in the...
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