Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, June 11, 2019,  11:37 am to 11:52 am)

A.

There are a great many differences in the lifestyles of elderly people. For example, some people use 50,000 yen of their savings each month. Some people live at home with their parents and their pension payment does not reach 200,000 yen. For some, their Farmer’s Pension Fund may be around 38,000 yen a month. Those who live with their children and live in rural areas may face no difficulties. There are some people who receive 200,000 yen, and some people who receive less than that because they start receiving their pension earlier.It differs for each person, so with all those variables it is impossible for us to deliver an unconditional average that covers everyone in every case with the public pension serving as a basis.

Q.

Looking at it another way, are you saying that it is a mistake to think that the pension alone will be enough to make a living in old age?

A.

There are people who may be able to make a living on the pension. Some people will find their pension 50,000 yen short of being able to live an affluent lifestyle, and some people will find that they will have adequate pensions. I am not sure of the accuracy of saying that the pension alone will not be enough to live an affluent lifestyle.

Q.

Prime Minister Abe also explained yesterday that the figure of 20 million yen was misleading. I think that the intent of the report was to inform people that increasing lifespans mean they may live longer than they expect, and as such, people may outlive their own assets. It seems that the intent of the report was to send a message that this may possibly happen, and therefore people should prepare for that risk. But by withdrawing the report, it may have been perceived that you are withdrawing not only the 20 million yen figure but the intent and main points of the report. How do you think this should be cleared up?

A.

Some people read the report as being a statement that the national pension system was in trouble. However, that is not what we think. We suggested that pension recipients generally receive approximately slightly over 50% of the salary they received while working. It appears as though some magazines portrayed that as if we were saying that the pension system was going bankrupt. That is not at all what we said, and is not at all what we meant.
Let me explain the simple calculation by which we arrived at the 20 million yen figure. Picture a case where a person lives to 100 and they start receive pension payments at 65, so they receive payments for 35 years. If they are short 50,000 yen to live an affluent lifestyle each month, times that by 12 months to reach is 600,000 yen per year, then times that by 35 years and we arrive at 20 million yen. In reality, however, there are many who say the pension payment of 200,000 yen per month is enough to support their lives. The real question involves the supposition that all elderly will need 250,000 yen. We averaged together all people with low earnings and people with high earnings and presented a mean calculation, and that appears to have caused confusion. Some people are wondering if it applies to them. The way the calculation was presented was very easy to misunderstand.

Q.

So the intent of the report was to tell people to extend the life of their assets, and you are not going so far as to retract that.

A.

You are correct. What we’re saying is, there was a time when interest rates were 6% or 5%, but now that rate is nearly non-existent, and as such it’s often said that there’s no point in saving. It would take 1.2 billion yen to generate 10 thousand yen over one year, according to calculation with a normal bank account at an interest rate of 0.0001%. That’s not building assets for old age; it’s simply putting money aside. We want people to think about saving for old age, so we are promoting various investment methods with various forms of assets management such as Dollar-Cost Averaging NISA for asset building. Some people are saving money for old age, some who’ve had savings since they were children, some who are saving for their children, and I don’t think it’s a mistake for them to switch to NISA or something similar.

Q.

Why was information that differs from the government’s stance released?  Although that intended to make recommendations on asset building in the future, why was there information released that portrays the pension system as going bankrupt?

A.

That’s a question for the working group, because we are not directly involved. I’d suggest you ask that question directly to the working group.

Q.

I think the base of it was made by the FSA. So do you think perhaps this report is the result of their intent to involve many people in the asset market, or create a favorable circumstance for the equities tax system in sight of the Request for Tax Revisions?

A.

That is your assumption, and may be how you see things, but that is not at all what we think.

Q.

You said there is a part in the report that is written in a way that makes it sound as if the public pension will collapse. However, the report also includes references to the effect that nursing costs may increase, or that it may be better to move to a rural area where household expenses are lower, for example.

A.

What page is that?

Q.

On page 40. In the attached material, it is written that relocation to rural areas where the household expenses and living expenses are relatively inexpensive is among the options. Are you considering correcting that as well?

A.

That also depends on the person. People living in rural areas have low living expenses. However, some people have difficulty walking, and transportation services may be poor in rural areas, causing travelling expenses to increase. However, there are various things to consider, such as, by that time, self-driving cars may be fully operational. We can’t make an across-the-board statement here either, so it’s not as easy as simply saying people should move to a rural area.

Q.

You’re saying that it is related to what the local people do, so is this description changing too?

A.

Yes. It’s difficult to live if the means of transportation are extremely inconvenient, and there are some areas where it’s hard to fulfill shopping needs. I think the people who wrote that it’s better to live in such a rural area have never lived anywhere outside the Tokyo metropolitan area themselves. That’s what I thought when I saw that. A part of my electoral district is a rural area, and I have some understanding of what it’s like there, so the way this passage is written struck me as odd. On the other hand, it may have been written on the assumption that self-driving cars, which have seen impressive advances, will be rolled out sooner or later. When reading the report, I thought that with automatic driving, people in rural areas may see less traffic accidents. Taking that progress into consideration, this statement seems a little unreasonable.

Q.

In that case, if these kinds of changes should be made, why was this released when it is completely different from what was intended? What is your view on that?

A.

That’s the same as the previous question you asked me. You’d have to speak with the working group. I have no answer to that question.

Q.

But it is the report of a Council under the FSA.

A.

To be precise, it is a report of an FSA working group that had yet become an official document through the general meeting of the Financial System Council.

Q.

In the opening statement, you explain that the report differs from the governmental policy stance. While it’s easy to understand your explanation that the average in the report may have caused misunderstandings despite differences in individual cases, what exactly does it mean to differ from the policy stance?

A.

For a long time, the policy stance was that the public pension was for the basics of making a living in old age. Now it is that the pension will cover a degree of the cost of making a living from the age of 65. We are to act in accordance with that. That is our policy stance. However, the report seems to state that that is impossible. Perhaps the people who wrote the report did not have that intention. However, that differs from our basic stance.

Q.

Having heard that, I agree with the message that individuals should accumulate their own assets. Do you have a schedule to release a revised edition that conveys that message more effectively?

A.

Because I myself made the judgement that we will not accept something that differs from governmental policy stance, at the current stage we are not able to provide a schedule for when a revised edition may be released.

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