On April 24, 2006, the Japanese government announced plans to close the gap between private sector pension and public servant pension payments.  Currently, public pension funds pay much more than private pension funds.  The government will gradually increase private pensions and decrease public pensions until they both reach 18.3 percent.

With this new policy, government and public servant retirees will receive the same pension benefits as retirees from private companies.  The government hopes that this new policy will not only eliminate the gap in pension benefits but help to decrease government pension spending.

To equalize pension schemes, the government announced that pension benefits for public employees will be cut by about 11 percent.  Only retired public servants who receive less than 2.4 million yen a year in benefits will continue to receive the same amount.  For all other retired public servants, pension benefits will be cut.  Currently, many retired public servants receive full pension benefits and often decide to go back to work in the private sector.  These retirees earn incomes from private companies while still collecting large pension benefits from the government.