Japan’s Predicted Pension Gap Puts Government on the Defensive

Couple standing on money
A government report telling citizens they'll need to save big to make it to 95 has Japan anxious - and Prime Minister Abe is scrambling to contain the fallout.

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It seems to be one thing after another for Prime Minister Abe Shinzo and his Liberal Democratic Party (自民党; Jimintou).

After his dismal failure to mediate talks between the US and Iran, Abe is back on home turf and once again under fire for purportedly concealing the true state of Japan’s pension system after a report revealed that retired couples who lived to 95 would face financial shortages of roughly 20 million yen ($185,000) were they to completely rely on their pensions for living expenses.

(JP) Link: “The FSA is So Daft” — An Exasperated Shinzo Abe and Government Tamp Down on Pension Woes

Back in April, the Financial Services Agency (金融庁) released a report that concluded couples preparing their post-retirement budgets should save between 15 million to 30 million yen (USD $139,000 to $277,000) — and that’s not including pensions, public or private. This is a dramatic difference from the agency’s earlier June 3 report stating that 20 million yen was the rough estimate.

The real mess began last week when Finance Minister Taro Aso — who has a history of public fumblings — flat-out refused to accept the FSA’s report, saying it was causing misunderstandings and that the pension system was indeed reliable. FSA director Mitsui Hidenori was forced to back down and apologize for “causing this kind of a situation.”

(JP) Link: “I Won’t Accept It” — Aso Withdraws “20 Million Yen Retirement Savings” Report

There was outrage on both sides of the political spectrum to Taro’s actions. The mishandling of pensions has been a blight on the image of Abe’s administration since 2007, when Abe and the LDP suffered a severe blow when the issue of “lost pension records” (消えた年金記録) came up. Political journalist Tadaaki Nogami notes that this pension problem is Abe’s kimon (鬼門) or “weak point.”

This does not bode well for Abe, as the timing could not have been worse with the summer Upper House election fast approaching. Abe’s opponents are taking advantage of the situation and hailing this latest bungle as proof that Japan’s pension system is failing – and that Abe has done nothing to help save it. Kyodo News reported that Abe’s approval ratings have fallen almost 3% since the mishandling of the report was made public. That same survey also showed a whopping 74.3% were now concerned about their post-retirement futures, while a sizable 68% also said they “couldn’t accept” Aso’s response to the issue.

People are wondering how they could ever save 20 million yen by the time they’re of retirement age. Protesters took to the streets of Tokyo on June 16 to voice their frustrations, and to call out the government for failing to address the issue seriously. Some wondered if Taro had even bothered to read the FSA’s report before rejecting it. Lawyer Uchikoshi Sakura took to Twitter to express her dismay, saying:

If they don’t revise the policy based on reality, does it make that reality invisible to us?

As it stands now, the pension system isn’t looking so appealing to many. Yet with Japan’s rapidly aging society, more and more people will be needing to rely on pensions, especially if they don’t have a nice nest egg set aside. Along with the looming consumption tax hike later this year — from 8% to 10% — Abe and the LDP aren’t going to be able to smooth this over anytime soon.

If the pension issue comes up during the Upper House elections – which is now very likely, thanks to Taro – Abe and the LDP may suffer a severe blow as a result. One thing is clear: the people are not going to forget anytime soon. Their livelihoods are at stake, after all, even if the government fails to address that reality head-on.

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