EDITORIAL: An open letter to the elderly on pension benefits

August 20, 2012

No doubt, many readers enjoyed happy reunions with their families during the Bon holidays in mid-August. It's a time to catch up with children and grandchildren, often after a prolonged period.

But try to imagine how you would feel if your sons and daughters--who are now in the middle of rearing their own children--said your pension benefits were too generous, having been funded at their expense. Or they might insist that you pay more out of your own pocket at hospitals to cover your medical expenses.

You would probably feel like retorting that you have every right to receive the pension and health care benefits you are receiving now because you worked hard when you were young and duly paid pension premiums.

Such a reply would likely cause relations with your children to grow tense.

Japan is now faced with a dilemma over benefits that could give rise to such tension between generations.

The nation’s social security system provides relatively generous benefits to elderly citizens, but offers much less to the working population. The system inevitably has to be adjusted as the nation’s population ages and birthrates fall.

The question is how it is possible to strike a fair balance between the burdens and benefits of different generations.

After the recent Diet passage of legislation to raise the consumption tax rate, many people argued that insufficient efforts have been taken to increase the efficiency of social security by streamlining the system.

The government considered a number of proposals to bolster the financial basis of the system. They include cutting pension benefits and raising the pension age, as well as raising the ratio of out-of-pocket payments for medical costs by patients aged 70-74 to 20 percent, as prescribed by the law, from the current reduced rate of 10 percent.

But none of these measures were included in the bills for integrated tax and social security reform.

That’s because politicians fear antagonizing you senior citizens who, as voters, constitute a powerful constituency.

Pension benefits were not reduced when prices fell, even though they are indexed to inflation. But the Diet has not yet started substantial debate on a bill to lower pension benefits.

We understand the anxieties felt by elderly people with regards to cuts in pension benefits and increases in out-of-pocket payments for health care. It is undoubtedly difficult for people of your age to earn money by working. People of advanced age tend to visit hospitals more often than when they were young.

But take a moment to think about the lives of your children and grandchildren. Aren’t they suffering from job losses or pay cuts or struggling with the financial burden of mortgage payments or education costs? Aren’t their tax and social security burdens unfairly high in light of their financial circumstances?

If the government’s debt increases further, won’t your grandchildren have to deal with a big tax increase in the future?

You may give your grandchildren pocket money frequently, but that doesn’t help society as a whole.

There are, of course, many needy senior citizens.

About 10 percent of elderly households have no savings at all, and 40 percent of households receiving welfare benefits under the livelihood protection program comprise elderly people.

On the other hand, 10 percent of elderly households have savings of 30 million yen ($377,000) or more, and many old people own land and other valuable assets.

In other words, lowering out-of-pocket payments at hospitals and cutting pension premiums for all elderly Japanese doesn’t make sense.

Elderly people need to accept an increase in their social security burden. Then, they should support a reform of the system that requires people to shoulder a burden commensurate with their income and assets, regardless of their age, while ensuring that people receive the benefits they really need. Don’t you agree that’s the only fair way to proceed?

--The Asahi Shimbun, Aug. 19

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