The lower house of Japan's parliament on Thursday approved legislation that effectively raises the country's mandatory retirement age to 65 from 60 as the government and employers try to deal with swelling pension costs due to an aging society.

Revising the retirement age and accompanying pension law has been the topic of debate among the government, unions and business lobbies as Japan's aging population has put an ever-larger squeeze on the country's finances.

As of Oct. 1, 2011, a record 23.3% of the population was 65 years of age and older, according to the Cabinet office. The figure is expected to climb to 38.8% in 2050.

The bill passed the lower house with the agreement of the three major political parties-the ruling Democratic Party of Japan and the opposition Liberal Democratic and New Komeito parties. Its passage through the upper house is considered likely given the cross-party support.

Under current law, employers can decide whether to keep employees after they retire at 60, often on reduced terms. The proposed legislation would give employees the right to decide whether to stay on until 65.