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Article Japan: Supreme Court Declares Reduction of Old-Age Pension Benefits Level to Be Constitutional

On December 15, 2023, Japan’s Supreme Court dismissed an appeal from a pension recipient that claimed the Diet’s (Japanese parliament’s) and Cabinet’s reduction of pension amounts from 2013 through 2015 was unconstitutional. (Case No. 2022 (gyo-tsu) 275.)

Facts of the Case

Until 2005, the pension benefit amount was annually adjusted in accordance with the National Pension Act (Act No. 141 of 1959, as amended) and the Employees Pension Insurance Act (Act No. 115 of 1954, as amended) on the basis of price changes. However, from 1999 through 2001, the pension benefit amount was not adjusted despite a fall in prices. During that time, the Diet enacted special acts to justify the lack of adjustment in order to alleviate the impact on the lives of pensioners. The government and the Diet expected that by not adjusting the benefit amount despite increased prices, the benefit level in comparison with prices would eventually return to normal. Meanwhile, in 2004, the Diet amended the pension acts to adopt a macroeconomic slide formula to adjust pension amounts. (Act No. 104 of 2004.)

However, the benefit level did not return to normal because the economy did not change as expected. The Diet ultimately amended the pension acts to reduce pension benefit levels back to normal in November 2012. (Act No. 99 of 2012.) The amendment decreased old-age pension benefits by 2.5% over three years.

Several groups of old-age pension beneficiaries sued the government in local courts to demand cancellation of the government decision to reduce pensions, arguing that the reduction in pension amounts was unconstitutional because it violated the right to life and property rights. (Constitution of Japan, 1946, arts. 25, 29.)

The Supreme Court’s Decision

The Supreme Court stated that the special level of old-age pension benefits was planned to be lifted in the future from the beginning.

According to the court, because pension benefits are financed primarily by insurance premiums borne by the working generation, maintaining pension benefits at the special level means current working generations are forced to bear a burden that exceeds their original burden. Maintaining the special level will also put pressure on the country’s financial resources when the working generation begins to receive pension benefits.

Moreover, the court determined that, when the 2012 revised law was enacted, it was reasonably expected that, as Japan’s birthrate continued to decline and aging population continued to grow, the ability of the working generation to pay insurance premiums and taxes would further decrease, while the total amount of old-age pensions to be paid would further increase.

The court further stated that eliminating the special level of pension benefits for those who received a temporary increase would promote fairness between generations and prevent the deterioration of the financial foundation of pensions, which cannot be said to be unreasonable from the perspective of ensuring the sustainability of the pension system.

Accordingly, in the view of the court, the measures taken by the legislature could not be regarded as extremely unreasonable or clearly exceeding or abusing the scope of their discretionary power. Therefore, the court held that the measures were not an unreasonable restriction on the right to receive benefits and a violation of the constitution.

Sayuri Umeda, Law Library of Congress
January 23, 2024

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Chicago citation style:

Umeda, Sayuri. Japan: Supreme Court Declares Reduction of Old-Age Pension Benefits Level to Be Constitutional. 2024. Web Page. https://www.loc.gov/item/global-legal-monitor/2024-01-22/japan-supreme-court-declares-reduction-of-old-age-pension-benefits-level-to-be-constitutional/.

APA citation style:

Umeda, S. (2024) Japan: Supreme Court Declares Reduction of Old-Age Pension Benefits Level to Be Constitutional. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2024-01-22/japan-supreme-court-declares-reduction-of-old-age-pension-benefits-level-to-be-constitutional/.

MLA citation style:

Umeda, Sayuri. Japan: Supreme Court Declares Reduction of Old-Age Pension Benefits Level to Be Constitutional. 2024. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2024-01-22/japan-supreme-court-declares-reduction-of-old-age-pension-benefits-level-to-be-constitutional/>.