The Lower House Financial Affairs Committee met in session June 14 to discuss Finance Minister Taro Aso’s decision to refuse to accept a Financial Services Agency report that said elderly couples would need substantial savings to survive.

Pointing out that an elderly couple would need to draw on their savings to make up an average difference of 50,000 yen between their monthly spending and income, including pension benefits, the report compiled by an FSA advisory council said they would need a total of 20 million yen ($185,000) over 30 years.

In explaining his decision, Aso said the report has caused “misunderstanding and anxiety” by giving the impression that public pension benefits are insufficient to cover their living expenses in their retirement years. “I will not accept the report because this argument is at odds with the government’s official position that pension is a core source of post-retirement income,” he said.

The ruling coalition of the Liberal Democratic Party and its junior partner, Komeito, has rejected an opposition request for Budget Committee sessions at both Diet chambers, contending that the report does not exist because Aso, the chief of the FSA, has not endorsed it.

Simply killing the report, however, does not help alleviate anxiety about pensions among the public.

The government and the ruling camp should realize that their reluctance to discuss pension issues on the Diet floor is undermining public confidence in the pension system.

To be sure, the report made a flawed argument by equating the average monthly spending by retired Japanese with the amount they need to get by and describing the difference between the amount and their income as “a shortfall” and “a deficit.” The government needs to correct flaws in this argument through detailed explanations.

But the welfare ministry has told the FSA advisory council that retirees will have to withdraw larger amounts from their savings as social security benefits will dwindle in coming years.

The government has been taking policy measures to deal with this problem, including steps to enhance private pensions.

The FSA report’s argument that it is important for people to assess the amounts they need beyond their public pension benefits is not inconsistent with the government’s policy stance.

The slogan “Nenkin 100 nen anshin” (100-year financial security for the public pension program), parroted by policymakers in the government and the ruling camp, only means striking a balance between pension payouts and contributions to ensure there will be no unfunded pension obligations for 100 years while setting caps on the amounts workers are required to pay into the system.

Pension benefits will be reduced if the nation’s population declines and ages further.

The government has promised that pension benefits will amount to at least 50 percent of workers’ take-home pay. But the figure applies only to 65-year-olds. The actual levels of pension benefits will keep declining as pensioners age.

The policy challenge facing the government is how to allay anxiety among the people about whether they will receive sufficient pensions.

The government plans to respond to the challenge by implementing a major pension reform. The blueprint to avoid the financial exhaustion of the pension program includes measures to encourage people to work until the age of 70, to expand a system to allow retirees to increase their pension benefits by delaying when they start receiving them and to increase the number of non-regular workers covered by the employee pension program.

What if these measures will prove insufficient? Will the government then consider additional measures to support low-income earners or reconsider the current caps on workers’ contributions to the system?

Vital information for debate on these questions is provided by the government’s five-yearly reviews of the long-term fiscal prospects for pension benefits. The results of the previous review, conducted five years ago, were announced in early June, but the results of the latest review have yet to be published.

The government should release the results as early as possible for meaningful debate on the pension system as a first step to ease public anxiety about the future of the pension program.

--The Asahi Shimbun, June 15