By Mark Schreiber
Much of the global media's attention this week was turned toward the possibility of Greece's default. Its direct effect on Japan is difficult to foresee.......But of more pressing concern to the man on the street here is not what will happen to Greece, but rather how many more years he will have to remain in the labor force to receive even the most parsimonious of pensions.
Japan's population, as we all know, is aging rapidly. As the ratio of social pension scheme contributors relative to recipients keeps narrowing, the plan now in place provides for the age at which payments begin (for males) to increase incrementally over the next nine years, from age 60 (for men born in 1952) to 65 (for those born after 1961).
But due to the large numbers of postwar baby boomers who have turned 60 over the past half decade and a number of other factors — including a decline in income due to the ongoing recession and a large percentage of young workers who for various reasons cannot, or will not, keep up with their payments into the system — the Ministry of Health, Labour and Welfare has been forced to start mulling action to keep the fund solvent.
At a meeting held on Oct. 11, three possible strategies were proposed for cutting back on pensions. In a nutshell, these would extend the age from which workers begin receiving payouts from the current maximum of 65 years to 68. (Some pundits are saying even that won't be enough, and believe the age at which pension payouts start may eventually go as high as 70.)
Shukan Gendai (Nov. 5) ran diagrams of the three scenarios, with the size of individual payouts cut by ¥6 million (for Plan I, which would begin receiving payments from Age 65) to a cut of ¥9.6 million (for Plans II and III, which would not begin pension payments until age 68).
According to government figures, Japan in 2010 had 5.85 million workers aged 65 and over, constituting 8.9 percent of its total labor force. While Japan's percentage of elderly (over 65) who still work — 29.7 percent in 2008 — has declined in recent years, the ratio is considerably higher than those in Western European countries such as France, Italy and Germany (all below 10 percent) and over 10 percent higher than in the United States.
The pension cuts as proposed are certain to have a profound impact on retirees' living standards. Aera (Nov. 7) notes that for a married couple to purchase their own home, raise two children and amass savings, both partners would need to work their entire careers. A self-employed husband and wife working as a team would be spared from making large contributions to the social welfare scheme, but the pensions they receive would be commensurately lower, so they can not anticipate a "happy retirement." As for unmarried workers employed by temp-help dispatch firms or in other nonregular jobs, retirement income is likely to fall short of the ¥100,000 per month, considered the minimum for residents of urban areas.
Perhaps due in part to anxieties over Japan's long-term future, Shukan Bunshun (Nov. 10) reports a "flight of capital" has begun in earnest. In the past, foreign bank accounts were seen mainly as the preserve of the so-called "1-percenters" (the super rich); but with the current low interest rates on savings in Japan, more people of average means are also said to be seeking places where they can get a better return.
A source at the Japan branch of the Hong Kong Shanghai Banking Corporation (HSBC) told Shukan Bunshun that in the three months immediately following the March 11 earthquake and tsunami disaster, requests by Japanese to open accounts in the bank's overseas branches jumped fivefold over the level of January, "and have continued at a threefold level up to the present."
Some of these people may be saving in preparation for retirement abroad in a country with lower living costs. But Shukan Bunshun warns of numerous pitfalls, including high charges for title transfers and the possibility that one's heirs will get hit with double inheritance taxes on any foreign property holdings.
As Benjamin Franklin sagaciously observed, "In this world nothing can be said to be certain, except death and taxes."
(C) The Japan Times
__________________________________________________________
Credit: Reports and photographs are property of owners of intellectual rights.
Seniors World Chronicle, a not-for-profit, serves to chronicle and widen their reach.
Much of the global media's attention this week was turned toward the possibility of Greece's default. Its direct effect on Japan is difficult to foresee.......But of more pressing concern to the man on the street here is not what will happen to Greece, but rather how many more years he will have to remain in the labor force to receive even the most parsimonious of pensions.
Japan's population, as we all know, is aging rapidly. As the ratio of social pension scheme contributors relative to recipients keeps narrowing, the plan now in place provides for the age at which payments begin (for males) to increase incrementally over the next nine years, from age 60 (for men born in 1952) to 65 (for those born after 1961).
But due to the large numbers of postwar baby boomers who have turned 60 over the past half decade and a number of other factors — including a decline in income due to the ongoing recession and a large percentage of young workers who for various reasons cannot, or will not, keep up with their payments into the system — the Ministry of Health, Labour and Welfare has been forced to start mulling action to keep the fund solvent.
Illustative photograph by courtesy of BusinessInsider
At a meeting held on Oct. 11, three possible strategies were proposed for cutting back on pensions. In a nutshell, these would extend the age from which workers begin receiving payouts from the current maximum of 65 years to 68. (Some pundits are saying even that won't be enough, and believe the age at which pension payouts start may eventually go as high as 70.)
Shukan Gendai (Nov. 5) ran diagrams of the three scenarios, with the size of individual payouts cut by ¥6 million (for Plan I, which would begin receiving payments from Age 65) to a cut of ¥9.6 million (for Plans II and III, which would not begin pension payments until age 68).
According to government figures, Japan in 2010 had 5.85 million workers aged 65 and over, constituting 8.9 percent of its total labor force. While Japan's percentage of elderly (over 65) who still work — 29.7 percent in 2008 — has declined in recent years, the ratio is considerably higher than those in Western European countries such as France, Italy and Germany (all below 10 percent) and over 10 percent higher than in the United States.
The pension cuts as proposed are certain to have a profound impact on retirees' living standards. Aera (Nov. 7) notes that for a married couple to purchase their own home, raise two children and amass savings, both partners would need to work their entire careers. A self-employed husband and wife working as a team would be spared from making large contributions to the social welfare scheme, but the pensions they receive would be commensurately lower, so they can not anticipate a "happy retirement." As for unmarried workers employed by temp-help dispatch firms or in other nonregular jobs, retirement income is likely to fall short of the ¥100,000 per month, considered the minimum for residents of urban areas.
Perhaps due in part to anxieties over Japan's long-term future, Shukan Bunshun (Nov. 10) reports a "flight of capital" has begun in earnest. In the past, foreign bank accounts were seen mainly as the preserve of the so-called "1-percenters" (the super rich); but with the current low interest rates on savings in Japan, more people of average means are also said to be seeking places where they can get a better return.
A source at the Japan branch of the Hong Kong Shanghai Banking Corporation (HSBC) told Shukan Bunshun that in the three months immediately following the March 11 earthquake and tsunami disaster, requests by Japanese to open accounts in the bank's overseas branches jumped fivefold over the level of January, "and have continued at a threefold level up to the present."
Some of these people may be saving in preparation for retirement abroad in a country with lower living costs. But Shukan Bunshun warns of numerous pitfalls, including high charges for title transfers and the possibility that one's heirs will get hit with double inheritance taxes on any foreign property holdings.
As Benjamin Franklin sagaciously observed, "In this world nothing can be said to be certain, except death and taxes."
(C) The Japan Times
__________________________________________________________
Credit: Reports and photographs are property of owners of intellectual rights.
Seniors World Chronicle, a not-for-profit, serves to chronicle and widen their reach.
