Japan estimates cast doubt over public pension sustainability
Japan’s government unveiled estimates on Tuesday that showed public pension benefits steadily declining during coming decades, as it prepares to open up a debate on social security reforms needed to support an aging population.
Curbing bulging welfare spending is a vital step toward fixing the industrial world’s heaviest debt burden, which is currently more than twice the size of Japan’s $5 trillion economy.
While Prime Minister Shinzo Abe’s government has made welfare reform a top priority, it has moved slowly due to fears that it could alienate the public.
Japan has one of the oldest populations in the world, due to a low birth rate and people’s longevity, putting pressure on its pension system.
In its pension estimates – which are issued every five years to gauge health of public pensions – the government estimated monthly pension benefits at 220,000 yen ($2,087.48) per model married couple, worth about 61.7% of pre-retirement income.
This pension-to-wage ratio is projected to fall to about 51-52% by the late 2040s, with the possibility of sliding further to around 45% in the 2050s, depending on growth and population outlook.
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