The second arrow for “a nation of asset management” is about to be launched: the expansion of Defined Contribution (DC) pensions. For most people, the contribution limit for the individual-type DC (iDeCo) will increase by approximately three times to 62,000 yen per month, and the eligibility to join will be extended to just before the age of 70.
For the corporate-type DC, the regulation stating that “employee contributions cannot exceed employer contributions” will be abolished. Under this regulation, a practice of reducing salaries and substituting that funding as employer contributions had become widespread. This was done to allow employees to contribute more. However, when salaries were reduced, social insurance premiums also decreased, effectively having the side effect of “fattening private pensions at the expense of public pensions.” It is hoped that this negative practice will decrease in the future.
However, challenges remain. The increase in the contribution limit is for the first time in over a decade. While it is said to reflect wage increases during this period, does this mean the limit will continue to rise if recent wage increases continue? No, because the custom is to revise every five years, the next revision will likely be no earlier than five years from now.
Fundamentally, why is the limit determined by a specific “amount”? Why can’t it be linked to the inflation rate, as in the United States, and be automatically adjusted every year? A periodic, geyser-like eruption of revisions will always lag behind the actual state of the economy.
In Japan, specific laws determine the “amounts” for everything from child allowances to government procurement, which incurs a huge amount of time and cost for changes. I recently heard a Diet member speak about the necessity of a “comprehensive law to collectively adjust amounts in accordance with prices,” and this kind of thinking is essential.
The contribution limits for DC pensions, which were previously numerous and difficult to remember, will converge to about three categories. However, the amounts will still differ for the self-employed versus employees. As careers become more layered, the significance of drawing a line based on one’s attribute is fading. Since private pensions have fewer technical constraints than public ones, a single, unified number should be adopted. This simplicity is the shortest path to raising awareness and elevating the system to a standard used by a majority of the public.
(Haruka Urata, Representative, Urata Management & Finance Lab)
コメント