TOKYO (Kyodo) -- Japan's parliament on Friday enacted a pension reform law that will scrap a 1.06 million yen ($7,400) annual income threshold blamed for prompting part-timers to limit their work hours, while opening the way for a future boost to basic pension benefits.

The enactment came as a result of a last-minute compromise by Prime Minister Shigeru Ishiba, who heads a minority government, as the ruling coalition decided to accept a demand by the Constitutional Democratic Party of Japan, a major opposition force, to include a pledge to consider boosting the basic pension benefits in the future.

The changes were approved by the House of Councillors ahead of the June 22 end of its 150-day regular session.

The government is pushing for pension reforms as Japan's rapidly aging society leads to more pensioners and fewer people contributing to the country's basic and employees' pension systems.

The removal of the annual income cap of 1.06 million yen, which is expected to take effect in three years, came in response to labor shortages caused by more part-time workers curbing their work hours to avoid having to pay for employment pension plans.

When the barrier is scrapped, an additional 1.8 million people are estimated to join the pension scheme, according to the government.

The law is also intended to brace for a potential future decline in basic benefits for all pensioners if economic growth remains sluggish.

If a decline is projected during the next financial review of the pension system in 2029, the government will consider supplementing basic pension benefits by drawing on funds from the more financially robust employees' pension scheme.

Ishiba's Liberal Democratic Party was cautious about the idea out of concern that it would affect its prospects in the upcoming upper house election. The idea of tapping employees' pension funds was criticized even within the LDP as "diverting" money.