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Japan would need 190 tril. yen for social security services in FY 2040: gov't estimate

Prime Minister Shinzo Abe, right, speaks during a meeting of the Council on Economic and Fiscal Policy in Tokyo on May 21, 2018. (Mainichi)

TOKYO -- The government on May 21 made public for the first time its estimate of social security benefit expenditure for fiscal 2040, which would total some 190 trillion yen (US$ 1.71 trillion), up 68.7 trillion yen from the figure for fiscal 2018 -- a sharp increase due to the expected rapid greying of Japanese society.

The government presented the estimate to the Council on Economic and Fiscal Policy, which is chaired by Prime Minister Shinzo Abe.

Fiscal 2040 is expected to be the peak year for Japan's elderly population when children of postwar baby boomers, who were born from 1971 through 1974, will turn 65 or older. Officials said the government offered the estimate as a basis for revising the social security system so that it would meet the needs of the future.

Of the estimated total spending of 190 trillion yen, 25.8 trillion yen would be for nursing care, which costs 10.7 trillion yen for this fiscal year. Pension payments would more than quadruple to 73.2 trillion yen from the current 16.5 trillion yen. Medical care would cost somewhere between 66.7 trillion yen and 68.5 trillion yen, compared to the current figure of between 27.5 trillion yen and 29.3 trillion yen. Child care support would surge to 13.1 trillion yen, up from 5.2 trillion yen for fiscal 2018. Medical benefit estimates came in two ways based on different projections about economic growth, the inflation rate and salary levels.

Pension payments would be the largest segment of social security spending, but the percentage would be down to 39 percent from the current 47 percent. This eight-point drop would be due to measures to curb pension payments although the number of recipients would increase.

In contrast, the ratio of medical benefit spending would increase from 32 percent to 36 percent, and nursing care from 9 percent to 14 percent. Child care support would be around 7 percent, up marginally from 6.5 percent now.

According to the estimate by the National Institute of Population and Social Security Research, Japan's total population in the year 2040 would be 110.92 million, down 12 percent from the 2018 figure. The ratio of senior citizens aged 65 or older would be 35 percent from the current 28 percent, while the working population aged between 15 and 64 would shrink to 54 percent from 60 percent.

(Japanese original by Masahiro Sakai, Medical Welfare News Department)

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