We analyzed the quantitative impact of income transfer under the "five alternative plans of pension reform", which were announced by Ministry of Health and Welfare in December 1997, and under the 1999 Pension Reform Plans. We found the following. (1) While plan D (reducing benefit by 40%) of "Five Alternative Plans" is favorable for the younger and future generations (born after 1980), plan A (maintaining the current benefit level) is favorable for the transitional generations (born from 1940 to 1970). (2) The net income transfer through Kosei Nenkin System (pension system for employees) for the generation born in 1960 is almost zero under 1999 pension reform plan. For the generation born after 1960, the burden exceeds benefit, and net burden for future generations is almost 10% of their lifetime income. (3) The Kosei Nenkin System imposes implicit tax on labor supply. This implicit tax rate is higher for future generations. (4) For the generation born in 1975, net income transfer through Kokumin Nenkin System (pension system for self-employees) is almost zero. For the future generations, excess payment over benefit is equal to almost 3% of their lifetime income.
