Note 3-78

(78) Among the reasons why the public pension system had to be based on inter-generational support is the "initial-stage effect" (In the initial stage of the inauguration of a public pension system, insurance premiums had to be kept at a low level in order to avoid double burdens of supporting one's old parents privately and at the same time making contribution to pension funds for one's own future, while premium income from later generations had to be used in order to maintain the benefit level sufficient for retirement life). Another reason is that benefits to support the living of aged persons had to be guaranteed in accordance with social and economic changes, despite of the difficulty of predicting future social and economic changes. Incidentally, even if there is no public pension system, the burden of supporting the living of aged persons would also increase, if the declining birthrate and the aging of population progress.