[Corona Behind-the-Scenes Pension Reform] Start of pension at 75: Is it a loss unless you live to 90?
Hello, this is Shimon.
This is a story from my 20s...
Back then, I was
working as a manager at a certain izakaya.
There, I worked with a Burmese man named Bob.
We were working together.
At that time, although I was a manager
I didn’t have much money and my life was far from easy.
I wasn’t exactly living comfortably.
Bob, too, like me,
was living a苦しい life.
One day, Bob asked me for help.
He said,
Upon hearing this,“I have no money.” he seemed truly in trouble.
I too wasn’t exactly financially well-off.
So, after some hesitation,
since I had a bit more,
I decided to lend him 100,000 yen.
Of course, with zero interest.
Even if it never came back,
I was prepared for that.
However, afterward,
Bob gradually, little by little,
started paying me back,
and after seven years in total,the 100,000 yen was returned.
To me, Bob has become
a comrade who ran through our twenties together.
He has already returned to Myanmar, but we sometimes keep in touch.
We spoke on the phone the other day.
Given the current times,
the topic inevitably turns to COVID-19,
and Bob said,“Japan’s COVID measures are far weaker than Myanmar’s.”
He said.
As of the time we spoke,in Myanmar,
simply moving to another prefecture can require a week of quarantine or so.
With that kind of situation,
the economy isn’t circulating well,
and Bob himself is also in a difficult situation.
In fact, Bob started a shop in Myanmar
in January of this year,
and it was quite profitable.
However, even a business that had just started to pick up
seems to have fallen into trouble due to COVID.
The timing seemed a bit bad.
Listening to Bob, I realized
that “the whole world is suffering economic damage.”
Seeing how economically hit everyone is,it’s something we don’t often see in history.
With the future uncertain, the world is suffering.
But there are signs of recoverybeginning to appear.
For example, in Italy,
they announced that from today, the 4th,lockdowns would be gradually lifting.
Still,
lifting lockdowns could lead to new infections,
so we cannot let our guard down.
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Pensions Behind the COVID
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In a world facing such harsh circumstances,
recently the topic of “pensions”
has been gradually making headlines.
Hidden by COVID talk,
not much coverage has been given, but
since April 14 of last month,
the “Pension Reform Related Law” has begun deliberations.
Regarding the pension system
there are several changes, but
one big change is
“the start age for receiving a pension can be extended to 75.”
This means the start age options expand to 75.
The fact that the options for receiving begin have increased,
for us, it is not necessarily disadvantageous, but,
still, people criticize
that it is being marketed with too many advantages during a difficult COVID period.
And another point of criticism isthat the benefits are being emphasized
too much.
As a benefit of making the start age 75,
they claim that “pension amounts increase by 84% compared to starting at 65.”
That is stated.
If you just listen to that,
you might think,
“Starting to collect at 75 is quite advantageous.”Many people would think so.
However, there is a catch.
The 84% increase does not reflect payments like social insurance premiums,
which must be paid.
As pension income increases,
payments such as social insurance premiums also increase,
and on a take-home basis,
you do not actually gain 84%.
If,
someone who starts receiving 150,000 yen monthly at 65
begins at 75 as well,they would have to live past 90 for it to be
profitable in take-home terms.
In other words, if they die before 90,
getting it starting at 75 is a loss,so to speak.
The discussion about how much you can actually take home
isn't clearly explained,
and the focus is on“the pension amount increases by 84% if you start at 75.”
This has drawn criticism.
What is beneficial or notdepends on how long you live,
so it cannot be said universally,
but
it is important to not be swayed by surface numbers and
to collect information properly and decide for yourself.
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At least getting something is better
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But, either way,
to those younger or of the same generation, this is probably not relevant.
20 years, 30 years from now, pension systems
will be completely different, so to speak...
Thus, as this continues, the start of receiving may shift to 70,
then to 75...
and so on, gradually worsening.
We may end up in a situation where
“we’re lucky to be getting anything”
in the future.
I think many people already feel this way.
In Stock Academy too
there are many students who join
to relieve their retirement anxiety,
and they study stock trading daily.
If you are also worried about your retirement,
I urge you to start preparing as soon as possible.
Time does not wait for anyone.
Thank you for watching until the end today as well.
Keizo Shimoyama
