RIETI Report December 2015

Institutional Mechanisms Designed to Promote Elderly Employment and the Improvement of Pension Literacy

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For the second stage of Abenomics, Prime Minster Shinzo Abe is advocating a society where all of Japan's 100 million citizens play full and active roles. The labor force participation rate for elderly people aged 65 years and older has been rising steadily and is at 22.2% today, more than three percentage points higher than the level before Abenomics, and we are now entering an era in which one out of every four in the pensioner generation will be working. In the December issue of the RIETI Report, we present Senior Fellow Hiroshi Ikari's column "Institutional Mechanisms Designed to Promote Elderly Employment and the Improvement of Pension Literacy" which examines the relationship between elderly employment and old-age pensions in terms of regulatory and institutional systems.

Ikari first shows from a survey of middle-aged and elderly people that a sizable portion of the respondents are not so definite about their pension prospects. Ikari stresses the importance of increased pension-related literacy to ensure that people understand the risk of longevity properly in choosing how to receive their pension benefits. Finally, Ikari suggests some measures to be taken, including promoting the employment of elderly people and deferring the claiming of pension benefits beyond age 70.

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Institutional Mechanisms Designed to Promote Elderly Employment and the Improvement of Pension Literacy

IKARI HiroshiSenior Fellow, RIETI

A society where all of Japan's 100 million citizens play full and active roles is what Prime Minister Shinzo Abe advocates for in the second stage of his Abenomics economic policy. Indeed, since his return to the leadership in December 2012, the labor force participation rate for elderly people aged 65 years and older has been steadily on the rise to reach 22.2% today, more than three percentage points higher than the level before Abenomics. As such, we are now entering the era in which one out of every four in the pensioner generation will be working.

Elderly Japanese people are highly rated as human resources. In the World Economic Forum (WEF)'s latest Human Capital Report, Japan topped the list in the 65 and over age group (Japan ranked fifth in the overall human capital index covering all age groups). At the same time, however, the report also states that, just as a general observation, the presence of many elderly people in the labor market reflects the absence of a mature pension and welfare system. Building on the above observations, this article will examine the relationship between elderly employment and old-age pensions in terms of regulatory and institutional systems.

To read the full text
http://www.rieti.go.jp/en/columns/a01_0438.html

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