Why is there so much confusion around pensions?

[Deep Blue]

The government pension fund changes this a bit I think.

Have you seen any numbers around this?

From someone posted previously - to my surprise - the UK was in a much less bad (I struggle to use the word better in this context) position than Japan when it came to future Government pension payments.

https://www.oecd.org/publications/oecd- ... 991363.htm

Scroll down and select Japan. Pg 6 gives you 2065 projections as well.

There are no projections on fiscal sustainability here.

[RetireJapan]

Mercer have done some work on pension funds and rank the UK much more highly than Japan

https://www.mercer.com/insights/investm ... ion-index/

Japan is rated C on a scale or A to E.

Japan scores particularly poorly on sustainability (D).

Really curious, as UK pension is much more generous, is going up due to triple lock, and has no pension fund(?)

Japan is best country in Asia (after city states Singapore and Hong Kong).

[Deep Blue]

Mercer have done some work on pension funds and rank the UK much more highly than Japan

https://www.mercer.com/insights/investm ... ion-index/

Japan is rated C on a scale or A to E.

Japan scores particularly poorly on sustainability (D).

Really curious, as UK pension is much more generous, is going up due to triple lock, and has no pension fund(?)

Japan is best country in Asia (after city states Singapore and Hong Kong).

Demographics, balance sheet and fiscal deficit are all big problems for both countries but far bigger for Japan. Additionally the UK has more immigration which helps.

Politicians in Japan need to cut benefits like pension/healthcare, increase immigration or raise taxes. None of these are politically palatable so the can just gets kicked down the round.

Incidentally a sustained burst of inflation would be very helpful for bringing the debt/GDP ratio down but isn’t good news for the yen…

[Wales4rugbyWC23]

Mercer have done some work on pension funds and rank the UK much more highly than Japan

https://www.mercer.com/insights/investm ... ion-index/

Japan is rated C on a scale or A to E.

Japan scores particularly poorly on sustainability (D).

Really curious, as UK pension is much more generous, is going up due to triple lock, and has no pension fund(?)

Japan is best country in Asia (after city states Singapore and Hong Kong).

It does depend on what type of pension you are talking about. State pension and a few public sector pension schemes are pay as you go and far from sustainable in the long term, but UK occupational pensions are on a much firmer footing.

[Deep Blue]

I don’t know if it is the norm, but my DC corporate pension in Japan is an absolute fucking joke.

The contribution levels are ok, a lot lower than the UK and no option of employer matching.. but it is what happens to the money that is an absolute travesty.

So the employer will contribute 8% (first three years) and then 10% of salary (but only up to a salary of 20 million, then the contributions are capped at 2 million yen a year). So it’s not ideal and much less than the 18% contribution the same employer offers in the UK.

But whereas the whole amount of the UK contributions can be invested in funds selected by the employee, in a Japan the vast majority of the pension contributions are left in cash until retirement!!! Only 25,200 yen a month or about 300k a year is allowed to be invested in funds and the rest sits in cash earning nothing.

What the actual fuck? I did try to ask HR about this but didn’t get anywhere.

If this sort of lunacy is a system limitation no wonder Japan is score so low compared to other countries.

[sutebayashi]

My DC is not like that - my old place had a DB plan and I never thought about it because indeed the money was locked up in some low yielding nonsense, but my current DC plan allows me to invest in any approved mutual fund, so I’m in developed, developing market stocks, plus a gold fund.

Your DC might just be crap for some reason.. strange.

[Deep Blue]

My DC is not like that - my old place had a DB plan and I never thought about it because indeed the money was locked up in some low yielding nonsense, but my current DC plan allows me to invest in any approved mutual fund, so I’m in developed, developing market stocks, plus a gold fund.

Your DC might just be crap for some reason.. strange.

I can invest the DC element in any approved fund, and the choices are fine - low cost equity trackers, job done. But only the first 25,200 yen a month... the rest is "cash balance" and kept in cash. Really weird. I work for a large global bank, so it isn't like they are not financially literate, which makes me wonder if there is some limitation in Japan or not.

[captainspoke]

I can invest the DC element in any approved fund, and the choices are fine - low cost equity trackers, job done. But only the first 25,200 yen a month... the rest is "cash balance" and kept in cash. Really weird. I work for a large global bank, so it isn't like they are not financially literate, which makes me wonder if there is some limitation in Japan or not.

Maybe some odd interpretation of the Volcker rule?

[Tsumitate Wrestler]

I don’t know if it is the norm, but my DC corporate pension in Japan is an absolute fucking joke.

The contribution levels are ok, a lot lower than the UK and no option of employer matching.. but it is what happens to the money that is an absolute travesty.

So the employer will contribute 8% (first three years) and then 10% of salary (but only up to a salary of 20 million, then the contributions are capped at 2 million yen a year). So it’s not ideal and much less than the 18% contribution the same employer offers in the UK.

But whereas the whole amount of the UK contributions can be invested in funds selected by the employee, in a Japan the vast majority of the pension contributions are left in cash until retirement!!! Only 25,200 yen a month or about 300k a year is allowed to be invested in funds and the rest sits in cash earning nothing.

What the actual fuck? I did try to ask HR about this but didn’t get anywhere.

If this sort of lunacy is a system limitation no wonder Japan is score so low compared to other countries.

The 68,000 month ideco option is one of the few benefits offered for being hejokon. (Though the option of choosing to pay into the employee pension also exist).

The options offered by most brokers are decent.

[TJKansai]

If I had been able to invest the tens of millions of yen I have paid into the national pension system, the result would be a whole lot more than the forecasted retirement payment ¥2,000,000/yr.

On the other hand, most people need to be forced to save, so I do think a mandatory deduction is necessary. Matching from a company sweetens the pot too.

Just read an article about China in NYT:

China’s Young People Are Giving Up on Saving for Retirement

Citing a rapidly aging society, difficult job market and uncertainty about the future, some young people are rejecting the idea of saving for old age.