Low Japan birth rate may force pension cuts-report

TOKYO, July 2 (Reuters) Japan will have to cut its public pension payments within two decades if its rock-bottom birth rate doesn't pick up, the daily Asahi Shimbun reported on Sunday.

Japan's fertility rate, the average number of children a woman bears in her lifetime , fell to an all-time low of 1.25 in 2005, the same year that its ratio of elderly people to total population became the world's highest.

Quoting Health Ministry estimates, the Asahi said that public pension payments, currently guaranteed at half the average working income during a person's working life, will drop to 48 percent from 2023 if the fertility rate continues at current levels.

Officials could not immediately be reached for comment.

Japan's low birth rate and and greying population have long aroused concerns for future growth in the world's second-largest economy, as well as for the sustainability of its pension system.

The government said on Friday that the ratio of people aged 65 or older had reached 21 percent of total population in 2005, surpassing Italy's 20 percent to become the world's highest.

The ratio of people aged 15 or younger was the world's lowest at 13.6 per cent, below Bulgaria's 13.8 per cent.

Japan's populatio, now about 127 million, declined last year for the first time since 1945. Experts had long forecast the shift, but it came two years earlier than expected.

REUTERS SB KN0919