FSA made own estimate elderly couple in Japan needs up to 30 mil. yen nest egg

TOKYO -- The Financial Services Agency (FSA) made its own estimate that an elderly couple in Japan will need 15 million to 30 million yen in financial assets to make up for pension shortages to cover their living expenses over a 30-year period in their post-retirement lives, an internal document shows.

The FSA presented its estimate in April at a meeting of an FSA working group, which is under fire for projecting that an elderly couple will need 20 million yen on top of their pension benefits to cover their living expenses for 30 years.

Deputy Prime Minister Taro Aso, who also serves as finance minister and minister in charge of financial services, had earlier dismissed the working group's projection as inconsistent with the government's position that public pension benefits can cover people's living expenses in their post-retirement lives to a certain extent.

However, the FSA actually estimated the specific amounts of money needed to make up for a shortage of public pension benefits.

The agency presented its own estimate at a working group meeting on April 12 as briefing material provided by the secretariat of the group. On the same day, a division director at the Health, Labor and Welfare Ministry explained that the difference between real income and household expenditure is about 55,000 yen a month for an unemployed elderly couple based on a family budget survey.

The minutes of the meeting quotes an FSA official in charge as explaining that "we estimated the amount of financial assets people should build up."

The FSA's estimate is based on the assumption that a 65-year-old husband and his wife will spend 250,000 yen in monthly living expenses over a 30-year period following his retirement.

According to the forecast, an elderly couple will likely spend a combined amount of 95 million to 110 million yen over three decades. The agency projected that such a couple will gain 80 million yen over the same period based on the assumption that they will receive 221,000 yen in standard monthly benefits under the employee pension program.

The agency then concluded that such a couple will need to build up financial assets to cover a shortage of 15 million to 30 million yen that cannot be fully made up for with retirement allowances, 10 million to 20 million yen in private pension benefits and up to 10 million yen in loans.

The briefing material adds that due to personal wealth, not all households will need to accumulate such an amount to finance their living expenses in their post-retirement lives.

Noting there are people working at companies without retirement allowances or private pension coverage as well as self-employed people who have no choice but to rely on the national pension program, the FSA official in charge told the working group that each household needs to calculate how much financial assets they will need.

In a report released on June 3, the working group states that an elderly couple will need 20 million yen worth of financial assets to cover their living expenses for 30 years in their post-retirement lives, without taking into account the FSA estimate.

As to the reason why the working group chose not to use the FSA estimate, a member of the group explained, "We thought it'd be easier for consumers to understand an estimate based on a family budget survey."

(Japanese original by Naoko Furuyashiki, Business News Department, and Joichi Sato, Lifestyle and Medical News Department)