“There is no choice, it is necessary to lower the standard of living.” How the Japanese pension system works

Japan has the third largest economy in the world, but not everything is that smooth with the pension system here.

Japanese pensioners receive about 40% of the average salary, around the same share as in Russia or Poland, making it one of the worst results in OECD.

“Age of retirement is growing so quickly that it will probably reach the grade of 150 years in half a decade”, – ironically says the interlocutor of “Current Time“, Alex Tsai, founder and CEO of beepnow – skill-sharing blockchain based platform for freelancers that aims to eliminate age and other kinds of discrimination in business.

 

In his interview to “Current Time” Mr. Tsai described the way pension system in Japan, that’s been called a “global time bomb” by the analysts of World Economic Forum (mainly due to the rapidly aging population) is currently working.

Mr. Tsai thinks that the base of crisis lies in social and demographic situation in the country. “Young generations are paying for the pension of the aged, and now we have much fewer young people”, – he says.

Japan is the “oldest” country in the world by the median age, more than half of the population is over 46 years old.

If in 1950’s it was just the father of the family working alone could manage to support 8-10 children, now to support just a single child both parents have to work, Mr.Tsai says.

Main part of pension is paid by the government (around 600 USD per month), but there’s also additional part, amount of which depends on your salary, company and length of work experience.You can surely retire earlier, but this case the amount is reduced by 6% per each “underfulfilled year”.

Now the age of retirement is 65 years for both, men and women, but at the same time you can keep on working after this age without restrictions (what many actually do), but it’s quite complicated to find a new job if you are already a pensioner. According to Mr. Tsai words, usually people stop working about the age of 70.

“There is no choice but to lower the standard of living, since pension is just about 2200 USD for a couple per month”, – Mr.Tsai says, – “That’s approximately the amount that a new graduate earns, so it’s really hard for two people over 65 to retain the same standard of living with this money.

Subsistence minimum (excluding medical, housing and other allowances) for a person aged 60-69 in Tokyo is about 727 USD per month.

Just the rent of a small apartment with utilities costs about 1000 USD according to Numbeo, service that compares the cost of living in different cities based on user-provided info, data.Mainly because of  the high costs of living many Japanese who can’t find a well-paid job end up actually living in Internet cafes.

Mr. Tsai says that thoughts of him eventually retiring make him terrified.

“Now we have people aged 65 and above, they can survive till their last day as they surely have savings”, – thinks the founder of beepnow, – “My generation, when we are 65, we won’t be able to survive, since I don’t have so much savings”.

Do children help their aged parents? Mr.Tsai smiles: “It’s actually we, young people, still get financial help from parents.

Nowadays pensioners are more rich than the young generation, those that actually work”.

Original article:   https://www.currenttime.tv/a/japan-pensions-interview/29415897.html

beepnow team

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