Japan’s Financial Services Agency had estimated that ¥15 million to ¥30 million in life savings would be necessary per elderly couple in addition to pension benefits for 30 years of post-retirement living, informed sources said Tuesday.
The estimate was made separately from the controversial report by a working group of the agency’s Financial System Council that suggested that an elderly couple living on pensions need to amass ¥20 million in life savings, according to the sources.
Many different provisional figures regarding medical, welfare and other costs were used to make the estimates about how much life savings would be needed, a senior official of the agency said.
The working group ultimately adopted the ¥20 million estimate as it was calculated based on reliable household spending data compiled by the internal affairs ministry.
The alternative estimate was presented to the working group at a meeting on April 12.
It is based on the assumptions that an elderly couple receives ¥80 million in public pension benefits and ¥10 million to ¥20 million in retirement allowances and private pension benefits over the 30-year period. On the spending side, living expenses are estimated at ¥90 million, medical and housing maintenance costs at ¥5 million to ¥10 million, expenses for nursing care at zero to ¥10 million and housing loan balances at zero to ¥10 million.
The gaps between the assumed income and expenditures became the basis of the suggestion that ¥15 million to ¥30 million in life savings would be necessary.
Finance Minister Taro Aso told a news conference Tuesday that the alternative estimate was made while discussion was still in progress and was eventually not included in the final report by the working group, stressing that it was not intended to indicate the amount of savings that would be necessary for every elderly couple.
Aso, who doubles as minister for financial services, refused last week to accept the report, saying the panel’s estimate contradicted the government’s view that the pension system serves as the basis of household finances during post-retirement years, sparking criticism from opposition and ruling parties and even some Cabinet members ahead of an Upper House election next month.
The report, released earlier this month, admitted there were limits to 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.
Pension problems have been a major issue in past elections. In the 2007 House of Councilors election, when Shinzo Abe was serving his first term as prime minister, his ruling Liberal Democratic Party suffered a defeat over issues including the mishandling of public pension records.