Abstract: As an important part of social security, Japanese public pension system plays an irreplaceable role in economic development and social stability. However, after more than half a century, Japan's birth rate, dependency ratio, life expectancy and other demographic structures have undergone tremendous changes. The phenomenon of baby bust and population aging is becoming more and more serious, which has directly led to the reduction of the number of people joining the public annuity and the increase of the number of people taking public pension. The gap between revenue and expenditure of public annuity has become wider. The intergenerational and inter generational inequalities in the Japanese public pension system also have some negative effects, and the sustainability of the system has encountered serious challenges. However, the empirical results show that joining the public pension system can reduce risks and raise the level of welfare. Autoregressive model predicts the revenue and expenditure gap of public annuity in the next 30 years, which further proves that Japan can achieve the sustainability of public pension system.

Key words: public pension system, baby bust and population aging, ineguities between different generations, sustainable development