Among the seven major economies, Japan is one where ageing of the population is most worrying. This paper is a new attempt for studying the future of public pensions in Japan using a computable general equilibrium model with overlapping generations allowing for time-varying life-expectancy. The main result is that an active Fund policy outclasses a constant replacement rate policy from any point of view: (macroeconomic performance, actuarial fairness and social welfare). In addition, it also should be better than a constant contribution rate policy due to the low level of the Japanese tax pressure.