Redistribution Effects of the Japanese Public Pension System
Noriyoshi Oguchi, Yoko Kimura, and Tatsuo Hatta
This paper has three main objectives. The first is an inquiry into the meaning of public pensions in a free market economy with private pension systems. The rationalization of a public pension system will focus on efficiency rather than distribution grounds. The role of each public pension system in Japan will be clarified from this viewpoint.
Second, the intergenerational and intra-generational redistribution effects of the current system will be quantified on individual and aggregate bases. In particular, It is pointed out that an employee born in 1935 earns a net income transfer equal to 20% of his or lifetime earnings, while an employee born in 1970 makes a net contribution to the pension system equal to 10% of his or her lifetime earnings.
Third, insurance fees that will make the Japanese public pension system actuarially fair hereafter is estimated.