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Experts suggest 20 mil. yen won't be enough to make up for pension shortfall

This file photo shows a Japan Pension Service sign. (Mainichi)

TOKYO -- Concerns have been raised about the inadequacies of Japan's public pension system in the wake of a Financial Services Agency (FSA) panel report stating that an average elderly couple would need 20 million yen in addition to their public pension to fund a 30-year post-retirement life. Yet some experts are suggesting that even 20 million yen will not be sufficient.

In a news conference on June 4, Financial Services Minister Taro Aso, who also serves as deputy prime minister and finance minister, stated, "Do people think about their retirement money on the assumption they'll live to 100? I don't think ordinary people do. People have to think now about whether or not they've got any money."

In the report released the previous day, it was calculated that based on pension income and typical expenditures, an elderly, unemployed couple would be about 50,000 yen short each month. But people immediately started complaining that there was no way they would be able to save up 20 million yen for their post-retirement lives. Three days later, Aso refused to accept the report, criticizing it as containing "inappropriate expressions."

Economic analyst Hajime Yamazaki criticized the FSA report as simplistic, saying it seemed like a pressure tactic to prompt people to feel uneasy about the future and buy financial instruments.

"It would depend on household income, but I imagine that savings of 20 million yen would not be enough," Yamazaki says.

There are figures that back up his statement. Wakako Takaoka, a senior researcher at NLI Research Institute, commented, "Among households headed by people in their 50s, there is a large possibility that 46% of them would see their standard of living decline by at least 10% after retirement."

For her analysis, Takaoka modeled the case of a couple where the husband retired at 65 years old. She found that if the only disposable income they had were their public pensions, then to maintain their standard of living compared with when they had been working, they would need to save up 18 million yen if their income had been less than 3 million yen per year.

If their annual income had ranged between 5 million and 7.5 million yen, then they would require savings of 32 million yen. Based on these provisional calculations, Takaoka investigated households of people currently in their 50s, and found that in nearly half of them, the amount of money they would have to live on would drop by 10 percent or more.

The government, however, maintains that the financial base for Japan's public pension system is stable. One justification for this is the existence of a "macroeconomic slide" which decreases the level of pension payouts to lighten the burden of the current working population. However, the very existence of this stabilizer is one reason for people's uneasiness regarding public pensions.

(Japanese original by Masanori Makita, City News Department)

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