Public pension benefits will rise for the first time in three years in fiscal 2023, although at a slower pace than a major inflation rate, the Health, Labor and Welfare ministry said Friday.

Benefit increases, set at 1.9% for pensioners aged 68 or over, will be limited because the ministry will activate what it calls the macroeconomic slide mechanism to curb benefit payments for the first time in three years.

Japan revises the amounts of pension benefits every year to take into account changes in prices and wages.

The planned revision will be reflected in benefits from April, when the new fiscal year begins. The month’s benefits are paid in June.

On Friday, the Internal Affairs and Communications Ministry said the country’s consumer prices rose 2.5% last year. Other data shows that nominal wages grew 2.8% annually on average in the past three years.

Under the pension revision rule, fiscal 2023 benefit growth is put at the same rate as the consumer price change for pensioners aged 68 or over and the nominal wage increase for people aged 67 or under newly starting to receive benefits.

When both prices and wages are higher, the ministry activates the pension-curbing mechanism, aimed at ensuring the sustainability of the public pension system.

For fiscal 2023, the mechanism calls for deducting 0.3 percentage points from the rates decided under the revision rule due to an increase in life expectancy and another 0.3 points to reflect part of deferred past reductions.

As a result, the final rate of benefit growth will be 1.9% for those aged 68 or older and 2.2% for those aged 67 or younger, both below the 2022 inflation rate.

For those aged 67 or younger who have paid pension premiums for 40 years, the full monthly benefits under the kokumin nenkin program mainly for self-employed people will stand at ¥66,250 per person, up ¥1,434 from the previous year.

The monthly benefits will rise ¥4,889 to ¥224,482 for a couple under the kosei nenkin program for corporate and government employees.

For those aged 68 or over, the kokumin nenkin benefits will increase by ¥1,234 to ¥66,050, and the kosei nenkin benefits by ¥4,200 to ¥223,793.

The ministry also said the monthly kokumin nenkin premium will be ¥16,520 per person for fiscal 2023, down ¥70 from the previous year, and ¥16,980 for fiscal 2024, up ¥460.

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