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In the fiscal year 2023, social security benefits accounted for around **** percent of the gross domestic product (GDP) of Japan, down from about **** percent in the previous year. The highest level in the past four decades was recorded in fiscal year 2021. 

Social security benefits in Japan

Social security benefits, consisting of medical care, pension, and welfare and other benefits, amounted to over *** trillion Japanese yen in the fiscal year 2023. Pension benefits made up the largest category of social benefits available in Japan, at around **** trillion yen, followed by medical care benefits. Amid the aging population and shrinking workforce, which will cause a declining number of contributors to support a growing number of retirees in the future, Japan’s public pension system is under pressure and the government has scheduled reforms to the system for 2025.

Japan’s public pension system

Japan’s public pension system offers universal coverage to all residents since 1961. Like most public pension schemes, it partly finances pension benefits of current retirees with contributions made by current workers as a pay-as-you-go (PAYG) system. The public pension system consists of two pillars; a flat rate basic pension scheme mandatory for every resident aged 20 to 59 (National Pension) and an income-related Employees’ Pension Insurance for employees and public servants.