Japan's pension reserves slump in FY2011
24 Aug 2012
The fiscal 2011 balance settlement for the National Pension Plan and Employees' Pension System fell from a year earlier as the government drew from reserves in response to an increase in benefit payouts.
The balance fell by ¥2,518.6bn ($32bn) to ¥119,401.6bn, according to the Ministry of Health, Labor and Welfare, on a market basis including the performance of the Government Pension Investment Fund. Still, there remained a surplus of nearly ¥3trn on a single-year basis on the strength of a solid asset performance and lower pension obligations for new beneficiaries.
Benefit payments continue to exceed premium income in both the National Pension Plan and Employees' Pension System due to the nation's aging demographics. The Ministry is still in the process of raising the eligible pension age for the latter as well as premium rates, and expects the downtrend in total reserves to continue for now.
A breakdown in the balance on a market basis (by special account) reveals the Employees' Pension System had income of ¥42,657.9bn versus expenditures of ¥39,747.3bn in FY11, leaving a surplus of ¥2,910.6bn. The investment yield came to 2.17% for a profit of ¥2,420.1bn. This was largely a technical rebound from the negative results of FY10 (-0.26% yield, ¥306.9bn loss). Premium revenues, buoyed by a hike in rates, totaled ¥23,469.9bn, a gain of ¥744.7bn over FY10. Some ¥5,577.2bn in reserves was also drawn down and posted as income, but this was ¥765.9bn less than the previous year.
Expenditures were down ¥367.8bn year-on-year. Benefit payouts fell ¥277.2bn to ¥23,627.1bn as pensions for new beneficiaries were lower than those of former beneficiaries who died during the fiscal year.
The National Pension Plan had income of ¥4,837.8bn, up ¥152.6bn year-on-year. It maintained a 2.15% yield for a ¥166.2bn profit, but premium income itself slid ¥91.0bn to ¥1,580.7bn. Reserves, which were not touched in FY10, were drawn down ¥50bn, but ended ¥163.1bn higher at ¥7,902.5bn thanks to a robust asset performance. Expenditures were also up ¥174.0bn at ¥4,639.8bn. The balance on a market basis amounted to a surplus of ¥198.0bn.
Author: Nenkin Joho