• Kyodo, Bloomberg, Staff Report


The public pension system won’t be enough to sustain people’s standard of living in a rapidly aging society, according to a government report.

A council at the Financial Services Agency estimates that a couple who will live until 95 years old will need at least ¥20 million more than what their pension benefits will provide.

The council acknowledged that the public pension serves as the main source of income during the post-retirement years, but it is calling on members of the public to take greater charge of their finances to plan for their retirement by proactively managing and investing their assets.

The report, released Monday, admits the limits of the public pension system. It calls on individuals to take on more risk than in the past when planning their financial future, but careful selection of financial products will be necessary due to a potential loss of principal when investing.

For example, a couple with a man aged 65 or older and a woman aged 60 or older will face a monthly deficit of ¥50,000 if they depend only on their pensions, according to the report.

If the couple live another 20 years, they will be short by ¥13 million, and if they live 30 more years, they will be short by ¥20 million.

The report also says there is a possibility that lump sum or periodic retirement payments from companies will decrease over time.

In recent years, retirement money for those with college degrees averaged around ¥20 million, a drop by 30 to 40 percent from its peak.

A large number of elderly people are living in poverty in the world’s third-biggest economy, reflecting a decrease in lifetime employment and as the age to start receiving pension payments is rising from 60, eventually reaching 65 for all men in fiscal 2025 and for all women in fiscal 2030. The government has also floated the possibility of raising the age further to 68.

The relative poverty rate in Japan has stayed higher than the average rate in industrialized nations by more than 6 percentage points.

The decreasing birthrate is projected to have an impact on the pension benefits, with the shortfall expected to further widen in the future.

The report also cautions that elder care and medical costs are expected to be higher in the post-retirement period.

The report advises people to make adequate preparations for retirement before their cognitive capacity dwindles, such as sharing the location of bankbooks and financial asset information with someone trustworthy.

The number of people with dementia is projected to increase by 8.3 million people by 2030 and by 11.45 million people by 2060. One out of 3 people aged 65 or older will possibly develop dementia.

Family units are shrinking these days, and it is increasingly becoming difficult for elderly women in their 60s to live without financial support from their family members, as one-time payouts from retirement no longer cover the prolonged life spans. Of the 19.4 percent of the elderly who are in poverty, there are 14 percent more single women than single men.

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