Employees' pension program 10 trillion yen in red

Depressed stock prices, shortfalls in public pension programs nearly doubled to 10.1795 trillion yen in fiscal 2008 from the previous fiscal year, the Social Welfare Ministry reported Tuesday.
In addition, the national pension program for self-employed, unemployed, part-time workers and others who scored a red ink figure of 1.1216 trillion yen, the ministry said.

The deficit, based on market values were the highest since fiscal 2001. Comparable data for the previous period was not available.

Both pension schemes were in the red in fiscal 2007 as well. The deficit for the program of employee pension at the time came to 5.5909 trillion yen and the national pension program reported a loss of 777.9 million yen.

The Ministry of Health, Labor and Welfare attributed the higher losses mostly to investments in reserve funds. The global financial crisis that erupted last September caused stock prices to fall.

Employees lost pension program to 8.7252 trillion yen through investment in various market fiscal year 2008 and the national pension program was reduced from 592.4 million yen, the ministry said.

Reserve funds in both programs fell sharply to 116.6496 trillion yen for the employee pension program, to 13.5314 trillion yen since fiscal 2007, and 7.1885 trillion yen for the national pension program, to 1.2789 trillion yen.

Regarding income, the program's employees received pension premiums of 22.6905 trillion yen in fiscal 2008 to 721.4 million yen for fiscal 2007.

The higher revenues largely due to the fact that 496,000 people were in the program the previous year due to a relatively stable job market, at the beginning of fiscal 2008.

As for the national pension program, 752,000 fewer people than the premiums paid in the previous year, mainly because many baby boomers reached an age and no longer had to pay them.

This was the main reason for the decline in program income for fiscal 2008 until 1747 billion yen, 111.2 million yen for fiscal 2007.

Because pensions are financed by premiums and tax dollars, the deficit in one year does not affect the payments immediately.

"We have developed long-term prospects for the financing of pensions, taking into account stock prices and other factors, until late last year," said a ministry official social welfare.

"A balance between load and payments will continue in the future," he added.

However, if the economic crisis continues for a prolonged period, the pension might be reduced in the future.