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Provisional Translation

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

(Excerpt)

(Friday, June 14, 2019,  9:50 am to 10:00 am)

[Questions and answers:]

Q.

You have explained your opinion that you do not accept the report from the Council of the Financial Services Agency. However, the report has prompted concern from citizens regarding the pension’s ability to support them in their old age. While the Committee on Financial Affairs of the House of Representatives is scheduled for this afternoon, I’d like to ask for your response to the concerns of citizens. Also, where do you think the responsibility lies for this problem?

A.

It should be clarified that the report is a work in progress from a working group of the Council.
 
According to the Ministry of Health, Labour and Welfare as well as our own calculations, the existing pension system has been a secure system. Nevertheless, as this working group report suggests that the pension system facing issues, and makes mention of the pension system going into deficit, the average person sees that in the report or in the newspaper, and could possibly take it to mean that the public pension system itself is in danger. I believe that the expressions used in the report were exceedingly unsuitable and in reality were wrong. Normally, a report comes to us when it is approved in the general meeting of the Financial System Council. In this case, we stated at a considerably early stage that we would not accept this report.
 
Some of the people at the FSA were involved with the working group in making the report. I believe the issue for the FSA is that, at the report generation stage, it would have been better if they had provided the opinion that the expressions being used were unsuitable, and that changes should have been made. I feel that we must provide various forms of accurate guidance going forward.

Q.

Where does the responsibility for the problem lie?

A.

At this stage we cannot say where the responsibility lies. We can say that we must provide thorough explanation going forward, and it is our basic understanding that it would have been preferable if the people involved had been somewhat more thorough in advancing their tasks.

Q.

You’re saying that the part which caused concern over the pension system itself was a misunderstanding. However, it is my understanding that the report claimed that pension payments alone may possibly be insufficient to sustain a living, and that people should build their assets. Do you think that portion of the report is correct?

A.

The Farmers’ Pension Fund is a pension of 38,000 yen a month, and while there are some who live in an environment where that amount will be sufficient, people live under a variety of different circumstances. The report averaged together everyone from people with a great deal of savings to people with hardly any savings. And it also averaged together a mean cost for all of those people’s lifestyles. With all those differing factors in people livelihoods, I myself wonder what the reasoning was behind that calculation method.

Q.

I understand that this averaged value may not particularly apply to anyone’s case, but I assume that the statement that the pension alone is insufficient and assets should be managed accordingly applies to some people. Is that correct?

A.

That also largely depends on the person. Some people live in houses for which they have paid off their loans, and there are those who must start thinking about their retirement funds. The current pension system is based on various calculations, such as a rough estimate that the average office worker’s cost responsibility is not going down beyond 50%. In that sense, payment amounts may rise or fall, if the drop in prices due to current deflation rises due to inflation. It’s wrapped up in various intricate factors, such as some 200,000 yen growing slightly by a 0.1 increase on a macroeconomic slide. In addition, it’s necessary to conduct a calculation on an individual level to see how the current pension system applies to oneself. I believe it will vary greatly from person to person.

Q.

This is going back a bit, but just before you became Prime Minister in 2008, you said that with the aging population, insufficient work force, and lengthening life spans, the pension system could not be expected to be maintained, and that it was just a matter of time until it became unsustainable. What you’re saying now seems to be inconsistent with that.

A.

Now we’ve enabled the system with a macro economic slide that the system will not become overburdened. There was a major amendment to the pension system in 2004, and I believe that the current system is in much better shape compared to the system of that time.

Q.

Back to this current report, I think that as the Minister who consulted this, you could decide whether or not to make use of the report upon acceptance. Politically, for what reason, did you decide to reject the report?

A.

The reality is that the way the information was covered, however loosely it was based on the content of the report, has caused various concerns to spread nationwide. We’ve been working to clear this up, but with such concerns continuing into the start of a new week, we made our decision. The report is the opinion of the working group, and we are at a stage of coverage in newspapers and cap permission has not yet been received. Ordinarily the report would come before us through a resolution at the general meeting of the Council. Even if the report had come to us at the stage before that, we would have not been able to accept it. Concerns continued to spread while we were waiting for the report to come before us. So we made the decision to reject the report to stop the spread of such concerns.

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