Retiring late: As pensions underwhelm, more Japanese opt to prolong employment
TOKYO: Yasuhiro Furuse could have retired two years ago, but he wasn’t entirely happy with his pension income and had to put any such thoughts to bed.
It was just as well for Furuse’s employer Orix Corp , a financial services group, which would have struggled to find a replacement, with Japan’s jobless rate at 26year lows.
This win- win arrangement, increasingly common in Japan, highlights a structural and policy challenge facing the world’s thirdbiggest economy.
Prime Minister Shinzo Abe’s government is considering raising the retirement age to 70 or 75 from 65 now, to ease pension burdens as well as a labour crunch.
But a more durable longer term solution, analysts say, is for Japan to relax its strict controls on foreign workers.
“I have no choice but to work,” said Furuse, 62, a senior adviser at Orix’s corporate business headquarters.
“I appreciate that I could keep working, which makes me better off than living on pension and savings. Besides, I want to do something to contribute to society.”
Japan’s population is among the oldest on the planet and has one of the longest lifespans, putting pressure on its pension system.
The old-age dependency ratio – or the numbers of elderly against those of working age – is the highest in the OECD.
The situation is being compounded by Japan’s deepseated reluctance to fully open its gates to foreign workers, leaving many companies to rely on the old guard to overcome severe labour shortages.
On top of that, a lengthy spell of monetary easing by the Bank of Japan to battle deflation and spur growth has led to near-zero bond yields and crippled savings.
The current law requires companies to allow employees to work until 65 if they wish.
In practice, most companies, trying to keep a lid on labour costs, set a mandatory retirement age at 60, with an option of further five years’ work on reduced pay.
That is changing.
Orix has raised the mandatory retirement age for its employees to 65 from 60.
Some other firms such as Taiyo Life Insurance and restaurant chain Skylark Holdings Co, now also allow staff to work until 65, or 70 if employees wish.
“We will raise the retirement age to 65 to ... cope with a decline in the workforce,” Nippon Steel Corp said in a statement this month.
Mayumi Waki, a human resources manager at Orix, says the move was worth the extra spending.
The older workers seem more motivated, the firm can benefit from their client relationships for longer and younger talent has more mentors available. — Reuters