◆ Rising interest in asset building among young people
As we fast approach a world where a 100-year lifespan is the norm, it is estimated that the average person’s post-retirement income will fall short by 20-million yen if he or she relies on public pension alone. This is called the “20-million yen retirement problem,” and because of the commotion the problem has caused, a growing number of young people are now taking an interest in building up their finances for when they enter old age, with many people gathering at investment seminars held by securities companies.
◆ Over 50% of Japanese people are dissatisfied with their current assets and savings?
According to the 2019 Public Opinion Survey on the Life of the People released by the Japanese Cabinet Office on August 30th, 54.3% of respondents answered being “dissatisfied” or “somewhat dissatisfied” with their current assets and savings, a 2.1 point increase from the previous year.
On the other hand, the number of people who reported being “dissatisfied” or “somewhat dissatisfied” with regard to their current salary and income dropped by 0.8 points from the previous year, amounting to a total of 45.6%. These results mean that, for the third consecutive year, more people were satisfied than dissatisfied in terms of their salary and income.
According the Cabinet Office Public Relations Office, it is probable that the “20-million yen retirement problem” is accountable for people’s rising dissatisfaction with their assets and savings.
◆ Is the reevaluation of the individual-type defined contribution pension plan meant alleviate worry?
Given these circumstances, the Ministry of Health, Labour and Welfare is showing growing interest in revising the individual-type defined contribution pension plan (hereafter referred to as “iDeco”) that was considered in the Company and Individual Pension Subcommittee of the Social Security Council.
The same committee is aiming to make it so that all company employees are able to enter into iDeCo, as well as raise the age of eligibility from the current age of 60 to 65. A law reform proposal including these and other revisions is planned to be submitted during next year’s ordinary Diet session.
◆ Using a retirement plan that incorporates iDeCo to hire and hold on to young employees
Seeing that the public pension system is modelling income replacement rates for the current working generation at just 50%, it’s already crucial for business people to put forth concentrated efforts and build their own assets for retirement.
In addition to iDeCo, the aforementioned system revisions also seek to make corporate-type defined contribution pension plans more assessible by lightening the administrative load on businesses and making such policies easier to introduce.
Currently, the ratio of small and mid-sized businesses with fewer than 300 employees which provide retirement benefits through lump-sum payments or pension is declining by the year. With these revisions on the horizon, businesses should seize the opportunity to introduce systems which help employees build their assets, and show the appeal of companies where they are guaranteed stability for many years.
