This paper gives the background of Japan's public pension programs for the past 125 years. It reviews their coverage, design and governance aspects in the context of international comparisons. Japan's social security pension system is currently facing an incentive compatibility problem due to the aging and declining population. Adverse effects on the economy will be intensified by increasing the payroll tax for social security pensions. Further fine-tuning every five years will be required for the system to achieve sustainability. A partial funding shift to a consumption-based tax will be advisable, together with providing more incentives to private initiatives for retirement planning.
