Provisional Translation

Q.

My question concerns the recent report. In the Future Investment Strategy, the government pledged to expand and improve private pensions, and extend asset life as the population ages, which was the original pillar incorporated in the recent report, and that it will urge effort to be made to extend asset life. Can we therefore assume that this will remain unchanged as your policy going forward?

A.

Specifically, this has been being talked about for years, and I think I’ve  mentioned it before, but in the year I was born the average lifespan of the Japanese was 47 years. Now it’s almost double that, and this has happened in just 70 years. So it’s a difficult situation. And on top of that, all those years ago the newspapers used 55 years as their definition of elderly. I guess they only increased it when people born in 1915 reached 55 years of age.
And when the newspapers started using 55, everyone else followed suit. That became 60, and now it’s 65. Well, with the passage of time, healthy lifespans have increased. The average lifespan has become longer, and this certainly isn’t a bad thing. Personally, I think it’s a good thing. In that sense, because lifespans have gotten longer, the way people design their lives will change to adapt to that. All sorts of things change. To adapt that, people make various changes to their own economics and their design for the way they will live their lives, and that’s what’s happening. At one time, fixed-term savings deposits at banks or at the post office used to earn interest of 5% or 6%. Now it’s zero point something percent. How much money would you need to earn 10,000 yen in interest from an ordinary deposit account?

Q.

At least 100 million yen.

A.

It’s actually 1.2 billion yen. Because there’s 21% withholding tax. So you’d need 1.2 billion yen. The interest rate is only 0.001%, so you can’t even earn 10,000 yen in interest in a year. This is for ordinary deposits, not fixed-term deposits. So it’s an extreme situation, and hardly anyone has 1.2 billion yen in a deposit account. So people have to consider how to invest their assets in vehicles like NISA. In Japan there is said to be 1,700 trillion or 1,600 trillion in personal financial assets, and well over 900 trillion of that is in cash or deposits, so it’s not generating any new money at all. In the U.S., people put their money in stocks and bonds, so even though the amounts are the same, the income they get is higher. This is because it’s not cash or deposits, so there’s no doubt that people need to consider various ways of designing their lives. So people at banks and credit unions have contact with local people, and they will probably encourage various discussions. Conversely, we need to think about various things such as whether finance from credit unions can be trusted, because people will say wait a second, there are going to be lots of people trying to deceive elderly people, and or that dementia needs to be taken into account, and these will need to be considered as separate issues. People will be worrying about whether they themselves will soon be diagnosed with Alzheimer’s, or that other people may think they have been, and whether they will be deceived. So it’s not an economic discussion at all. It’s a social discussion, and lots of different things, including things like that will need to be considered, so unless the financial sector and the police all consider various aspects of this issue, and take action together, I think tragic incidents could occur, so I think that we will need to consider how we can help individual people to take whatever steps will be best for them.

Q.

Regarding the refusal to accept the recent report from the working group, the opposition parties have described it as unprecedentedly reckless, and even among the ruling parties, former Speaker of the House of Representatives Bunmei Ibuki said that even though the report may have been contrary to the government’s view, it should still have been accepted, with the government thanking its producers and saying that it would use it for reference purposes. How do you feel about statements like this?

A.

There are also opinions like that. Obviously, there are going to be various different opinions, and lots of different things have been said, but at the very least you have to admit that these weren’t the findings of the Financial System Council. They came from a sagyou bukai [working group].

Q.

So a working group.