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Pension Reform in an Aging Japan

The public pension system in Japan is obligated to review its own financial stability every five years and thus it is reformed to a degree every five years, with some notable reformation years. In 1942 the KNH, Employees Pension Insurance, was formed for private sector employees and in 1954 was rebuilt, replacing the previously established earnings-based pension model with a two-tier model including a basic flat-rate feature. Disparity existed between private and public sector pension plans as public sector pension benefit levels were generally better and more widely covered, and to address the lack of coverage for certain private sector employees the KN, National Pension law, was passed in 1961 which set up a compulsory savings system requiring everyone from self-employers to the jobless to pay a flat-contribution rate on an individual basis for a flat-rate benefits package. In 1986, women obtained a way into the pension system through their husbands via contributions deducted from his pay, which entitled the wife to a flat-rate basic pension plan. In 1999, due to economic downturn the government froze increases in pension contributions and altered the age requirement to receive old age benefits from 60 to 65. >

Japan contains the fastest aging population in the world due to a combination of low birth rates and high life expectancy rates. This is believed to be true due to an increase in women participating in the workforce, the rising age of marriage and a growing proportion of unmarried women. In an attempt to alleviate a deteriorating pension system, the 2004 reform efforts were directed primarily at two goals, with the first being to cut benefit levels to better reflect the number of those supporting the pension system. The second goal was to slow down the total amounts of benefits paid so as to provide for increased longevity in the pension system's ability function as a reaction to the longer life-spans of the citizenry. Still, the issue of an aging population persists and the ratio of the elderly to the youth will therefore continue to rise, putting into doubt whether the youth will ever receive full benefits. >

Japan's Working Poor

Unlike several other modern countries, Japan has no official poverty line, making it difficult to get accurate figures on those suffering impoverished conditions. Instead Japan measures poverty based on a "minimum standard of living" calculated using median income, the OECD index and other factors differing from prefecture, to prefecture. Still, it is estimated that in 2006, when measuring on an individual basis using the Employment Status Survey, that 8.2% of regular employees made little enough to be considered working poor. Several factors have been found to be correlated with the working poor including single-parent households, shortcomings of the Public Assistance System, unstable employment and minimum wage insufficient to cover a minimum standard of living. Irregular workers tend to be members of the working poor and are often the result of Japanese companies restructuring. These workers also tend to be homeless, and reside in areas generally away from the public eye with well known homeless "villages" existing such as Hakenmura, a homeless village compared by scholar Toru Shinoda to the United States' Hooverville. Members of these communities tend to become day laborers, who by their nature are irregular workers. >