TOKYO, Dec 26 (News On Japan) - The individual-type defined contribution pension system, known as iDeCo, which offers tax-saving benefits, has sparked controversy online, with the phrase "iDeCo reform" trending on social media.
Currently, iDeCo is at the center of heated discussions across social media platforms.
iDeCo is a private pension system that supplements public pensions such as the national pension and employee pension plans. Often referred to as "another pension," contributions are accumulated and can be withdrawn after the age of 60. Additionally, recipients can enjoy benefits such as the "retirement income deduction" if taken as a lump sum payment.
The controversy now stems from a change in the rules governing this deduction period.
Under the current system, individuals receiving iDeCo lump sums at the age of 60 can maximize the retirement income deduction if there is a "five-year gap" before they collect retirement benefits. However, under the tax reform proposals outlined by the ruling coalition for the next fiscal year, this "five-year rule" is set to become a "ten-year rule."
In other words, unless retirement benefits are deferred until the age of 70, recipients will not be able to fully utilize the available deductions. This change has sparked outrage on social media:
From X (formerly Twitter):
"There’s no way most companies will let you work until 70!"
"This is a scam... How much more tax do they want to squeeze out of us?"
"This is the very definition of an iDeCo reform gone wrong."
Amid public outcry, the government moved into the final stages of adjustment on December 25th for the fiscal 2025 budget proposal.
Despite rising prices, wage increases, and the absence of fixed tax reductions next fiscal year, projected tax revenues are expected to reach a record high.
As annual tax revenues continue to exceed expectations, the question remains: how should we prepare for our retirement while national living standards show little sign of improvement?
Source: ANN
