Japan has been associated with the word "most" in terms of age for a long time, from the highest life expectancy to the highest proportion of retirees in society, to the proportion of pensioners among the working population.
TOKYO (Pakistan Point News / Sputnik - 20th August, 2018) Japan has been associated with the word "most" in terms of age for a long time, from the highest life expectancy to the highest proportion of retirees in society, to the proportion of pensioners among the working population.
What is the essence of the Japanese pension system and how has the issue of increasing the retirement age been resolved? Why do housewives receive a pension and until what age do the Japanese want to work? The Sputnik correspondent tried to find answers in the Ministry of Health, Labor and Welfare, and the Ministry of National Affairs, as well as by talking to Japanese people who have either already retired or are planning to do so.
The Japanese pension system is difficult to understand primarily because it has too many exemptions that make pension plans more flexible for individuals who, as it is fashionable to say in Japan these days, have entered their "second life."
The deeper you go into the detail of the Japanese pension system, the less obvious the answer to the question "What age is considered the retirement age?" becomes. The answer that falls closest to the truth is: "Everyone has a right to retire at 60, but he or she will be able to receive full pension benefits only from the age of 65."
Japan has an aging population, which means that fewer children are being born and the life expectancy of older generations has significantly increased. Ultimately, this leads to a growing burden on workers, whose taxes pay for pensions and subsidies for health insurance. At the same time, there has been a tendency to change the quality of life more often than not, elderly people feel good enough to continue working or even find a new field of work. The state is interested in ensuring that retirees remain working for as long as possible so that their taxes could supplement the budget.
"The states role is to regulate these processes. First of all, the employer cannot put out to pasture a person who has not yet reached the age of 60. On the contrary, the employer is obliged either to raise the retirement age to 65 years or keep employees who have reached between 60 and 65 years of age, or as long as he or she is willing to work. In fact, businesses do not have to set a retirement age and may resolve the issue individually with each employee. There is also a system of subsidies that the state pays an employer for employees who are over 65," an employee of the pension department of the Ministry of Health, Labor and Welfare, Atsushi Kawai, told Sputnik.
According to the latest statistics of the Ministry of National Affairs, the average life expectancy in Japan is 80.89 years for men, 87.14 years for women. The Japanese rightly believe that after their retirement they still have a third of their lives ahead of them. They call the time after retirement a "second life" in which all debts to society, such as the need to work, educate and support children, have already been payed. As such, retirement has become a time when people can devote their efforts and money to what they really want to do and what they could only dream about doing earlier.
The number of people over 65 years old is constantly growing in the country. In 2017, with a total population reduction of 210,000 people, the number of retirees increased by 570,000. These individuals account for 27.7 percent of the population, which is the highest rate in the world.
Moreover, for the first time since statistics began recording these figures, the number of people over the age of 90 amounted to two million people. Japan has a total population of 126 million people.
There are currently 7.7 million retirees in Japan, and they account for 11.9 percent of the working population. At the same time, 75 percent of these people prefer to work as independent contractors. According to polls, most often, retired people say they prefer this system because they "want to work when it's convenient" for them. Japan ranks first in the world in terms of the proportion of retirees among the working population.
The average level of savings per one pensioner family is 23.94 million Yen (over $216,000).
The pension fund in Japan today is 55 trillion yen, a significant portion of which (about 70 percent) is paid by workers and businesses. At the same time, the fund is in deficit: 12.5 trillion yen is contributed by the state from the budget.
HOW TO DISCREETLY RAISE THE RETIREMENT AGE
"In fact, the reform to raise the retirement age in Japan has been ongoing for 25 years. The process goes in stages: the age at which a person can rely on a full payment of his or her pension increases from 60 years, as it was before 2000, to 65 years, as it will be when the reform is fully completed in 2025. However, this does not mean that if a person retires earlier, for example, at 62, he or she will not receive anything. This system is structured in such a way that when you retire before the age of 65, you lose a substantial amount of money, which and this is important is not compensated and never bounces back," Kawai explained.
The intricacies of the Japanese pension system make more sense in pictures and graphs. So, for example, if a person retires at the age of 60, he or she agrees that their pension will be reduced by 30 percent; retiring at the age of 63 would mean a loss of 12 percent. But, at age 65, that individual would be able to retire and receive the full payment due. That is why this age is often considered the retirement age for the Japanese.
At the same time, if an elderly person continues to work without retiring, their pension payment will increase by 8.4 percent in just a year. People who choose to retire at 70 would see their pension go up by 42 percent.
A two-tier system of pension savings and payments has been adopted in Japan. The basic level exists for individual employers, students and all who cannot be considered as hired employees or workers of Japanese enterprises and government agencies. With payments of 16,490 yen per month before the age of 60, a person can expect to receive a pension of 65,000 yen per month from the age of 65, given they have had 40 years of experience.
The second level is entirely dependent on income. Payments amount to 18.3 percent of an individual's salary and are usually made by the employer, who deducts the necessary amount from the salary of the employee. Employers need to deposit these funds before the actual retirement, regardless of age, but employees can get it from the age of 65. On average, the size of this pension comes out to around 154,000 yen per month.
A distinctive feature of the Japanese pension system is that housewives not only have the right to a pension, but do not have to pay monthly pension contributions. By default, since the era of economic growth, the work of married Japanese women who Primary did housework and took care of children is believed to have provided solid support of their husbands, while men have devoted their energy to their jobs.
After reaching the age of 65, the housewife is entitled to a monthly pension that is equal to the basic level pension of 65,000 yen. Moreover, after the death of her spouse, a widow continues to receive some part of her late husband's "second level" pension.
It would seem that the Japanese system is built in such a way that everyone should strive to work as long as possible. However, in reality, this is not the case.
"The issue of job retention, as well as the size of the salary after reaching the age of 60 or 65, the conditions for continuing work differ depending on the companys rules. Somewhere, the position and the amount of salary can be maintained in full, somewhere a person will be transferred to a lower position with a lower salary, there is no single regulation on this," Kawai said.
Indeed, as the Sputnik correspondent found out, the actual age of retirement, which largely depends on working conditions after reaching the age of 60 or 65, is different in every company.
"I am 58 now. In 2 years I will retire immediately. Yes, I will go to the mountains, I feel great and full of energy. Now I am the president of the company. If the conditions did not change, of course, I would be ready to remain on this position for several years, but the rules in the company say that after I turn 60, both my salary and my [one-time] payment for longevity [in Japan it can be several hundred thousand dollars] will be sharply reduced. So it is simply not cost-effective for me to remain in that position any longer. I will retire and think of something nice to do," a company head from a large media holding told Sputnik.
A leading musician of one of the largest orchestras in Japan said that it is often more profitable to stay working after 65 years in ordinary companies, but not in the orchestra.
"A musician can stay at his workplace after turning 60 only after he appears before a committee, which is usually pro forma. He often keeps his salary or it comes at the expense of internal compensations and payments. But there can be no exceptions after he turns 65, he must retire and make way for others. There is a contest for the replacement six months before that and at the age of 65 he must leave the orchestra," the musician explained.
Japan is often described as a nation of workaholics. As a rule, this means long working hours, short holidays, as well as "karosi" which translates to "death from excessive labor" a term that has become international to the horror and shame of the Japanese.
According to public opinion polls, the willingness to work does not let go of the Japanese even later in life.
According to a poll conducted by the Ministry of Health, Labor and Welfare, among 3,000 people, 11.8 percent were ready to retire at the age of 60 and 21.4 percent at the age of 65. Only 23.6 percent of respondents were willing to work until they were 70-years-old, and 12.8 percent well after the age of 75. But the most popular answer came when 29.5 percent said "I want to work as long as I have strength." The Ministry concluded that 70 percent of respondents were willing to work after the age of 65.
"The state is working hard to help older people find themselves and their place after retirement. There is a service for the purposes of job search for people of retirement age," Kawai said in conclusion.
He stressed that in the "second life" it is not only the salary that is important, but also the feeling that one is needed and can contribute to society.
