The Japanese government adopted a plan on Tuesday to reform the public pension system for corporate employees, with the objective of increasing the number of part-time and short-term contract workers who will benefit. At present, only the employees of companies with a payroll of 501 or more are eligible for the pension program, meaning that smaller companies—those more likely to hire part-timers and workers on short-term contracts—are not covered.

Under the upcoming changes, employees at companies with payrolls of 101 or more will be included in the pension system from October 2022, while employees at companies with payrolls of 51 or more will be included from 2024. This is expected to increase the number of workers benefiting from the pension system by 650,000. Most of them may be women and the elderly, simply because these two groups are more likely to take on part-time and short-term jobs.

The government is also planning to raise the income threshold for pension payments and to increase the age at which workers can choose to receive their pension benefits. Furthermore, older workers who choose to start receiving their pensions later will receive higher monthly benefits.

Japan’s pension system is under pressure from its aging population and a retirement age that has not kept pace with life expectancy: legally, the retirement age is 65, but many companies practise a de facto mandatory retirement age of 60. However, the average life expectancy in Japan is 84 years, and pension payments tend to fall far below pre-retirement income. As a result, an increasing number of older people are opting to remain in the workforce.