By Feng Qiaobin, Fan Jianjun, Yang Guangpu, Wang Yingying & Jiang Yu, Department of Macroeconomic Research, DRC

Research Report, No. 241, 2019 (Total 5741) 2019-12-26

Abstract: Japan is one of the countries with the highest population aging ratios in the world today. In order to keep the public pension system sustainable, the Japanese government has established a financial verification system, which conducts a “physical examination” of the public pension system once every five years, so as to maintain a dynamic balance for 100 years. So far, Japan has conducted four financial verifications of pensions, which have played an active role in disclosing the financial status of pensions, uniting the consensus of the whole society on reform, leading the replacement rate of pensions into a gradual downward track, raising the payment standard of public pensions, changing the pension benefits from an increase without decrease mode to a mode of increase plus decrease, and introducing policies for delaying retirement age and deferring pension payment. In order to promote the sustainability of China’s pensions, it is advisable to refer to Japan’s pension financial verification system and take 50-100 years as the time span to establish the actuarial balance and financial evaluation system of China’s pension insurance as soon as possible. In addition, we need to strengthen the contribution incentive of pension insurance and combine the actual contribution base with the reduced rates.

Key words: public pensions, financial verification system, Japan