An Economic Approach to Public and Private Pensions

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Reviewing main roles of public snd private pensions, our research project has investigated possibilities of the contracting-out, and has discussed some policy considerations for developing private pensions in Japan. Main points are as follows:a. Public and private pensions have different roles in securing income after retirement. They should be combined for their respective merits to make out, while their drawbacks to be minimized.b. The contracting-out will be probably unsuccessful, since options will favor the contracting-out pension funds, while giving financial damage to public pensions.c. In order to develop private pensions in Japan, it is necessary to introduce tax deductions in contributing private pensions.d. The new estimate of future populations in Japan (the August 1986 estimate) expects about further 20% increase of retirement years after age 65, forcing further equivalent increase of contributions of public pensions.e. Pension policies should be based on the economic status of old people, who are and will be in wide variety of living conditions.