Japan eyes hiking optional pension age

TOKYO: Japan has okayed plans to let people choose to start drawing their state pensions beyond the age of 70 as it grapples with severe labour shortages, ballooning welfare costs and a shrivelling tax base stemming from its greying population.

The government said on Friday it would look to cement the proposals through legal changes after April 2020, adding that it would look at raising in stages the mandatory retirement age for some 3.4 million civil servants to 65 from the current 60.

Japanese people can currently choose to start receiving their pensions at any point between the ages of 60 and 70, with bigger monthly payments offered to those who do so after their 65th birthdays.

The policies may offer clues to how countries from Germany and Italy to China and South Korea could deal with the challenges sparked by their own ageing societies, from a lack of workers to spiralling welfare spending.

Japan has the world’s highest life expectancy, while the number of births last year fell to their lowest since records began over a century ago. Its population will shrink to 88 million from the current 127 million in the next four decades, the government estimates.

The grim demographics, coupled with a reluctance to loosen tight immigration rules, have led to the worst labour shortages since the early 1970s. —