Japan seen setting 2023 pension rise below inflation
Japan is expected to curb pension payment rises at rates below that of inflation, according to Nippon Life Insurance’s research arm.
NLI Research Institute has forecast an inflation rate of 2.5% for full-year 2022, but it expects the government to set the increase in pension payments for those aged 68 and above at only 1.8% for next year. It expects those aged 67 and younger to get a pension rise of 2.1% in 2023.
Although there are worries that the financial burden on the elderly will increase and hurt economic recovery, Japan’s large aging population makes it unsustainable for pension funds to keep pace with inflation. Therefore, NLI expects Japan to invoke its “macroeconomic slide” mechanism next year.
Kunio Nakashima, a researcher at NLI, forecast that inflation will hit 3.7% for the October-to-December quarter. He worked out that a husband-and-wife household receiving a monthly pension payment of 219,593 yen ($1,550.55) in 2022 would get 223,545 yen per month in 2023. Without the government adjustment, the family would have received 18,000 yen more over the course of 2023.
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