Implications of population aging

Transcription

1 Implications of population aging Koichi Ishikura Director & Chief Officer for International Affairs & Research Japan Securities Dealers Association June 5, 2017 * This presentation represents the views of the presenter, and not necessarily those of the JSDA.

2 mil Demographic changes in Japan In mil. 5.3% 61.3% 33.5% In mil. 23.0% 63.8% 13.1% Aging population Working-age population Child population In mil. 38.4% 51.4% 10.2% In mil Source: National Institute of Population and Social Security Research 1

3 Doubling time : speed of populating aging France Sweden UK US Canada Japan Singapore South Korea China Thailand Vietnam India Indonesia Source: Hiroki Nakaya, P.197, Financial Gerontology 2

4 Depth of population aging : : : years old 75 and over Source: National Institute of Population and Social Security Research 3

5 Birth rate (total fertility rate) (Million) 3.0 The first Baby Boom: The second Baby Boom: Latest data (2015): Number of births: 1,005,677 Total fertility rate: Source: Ministry of Health, Labour and Welfare 4

6 Life expectancy: longer than expected Men Women Real Real Source: National Institute of Population and Social Security Research 5

7 The spans : life span, health span and wealth span Life Span Actual period that a person lives Health Span Wealth Span Period that a person is healthy - not just alive Period that a person can live without financial constraints 6

8 Implications of rapid population aging Massive impacts on the entire economy and society Social security systems including pension and medical care schemes particularly affected, sustainability threatened asset-building by individuals for old age increasing in importance need for more effective pension schemes to enable efficient pension asset management 7

9 Actions in the capital market - NISA, Junior NISA and Installment-type NISA: Tools introduced to support individuals asset building - Amendment to the Defined Contribution Pension Act: Allows stay-at-home spouses and public employees to access DC pension plans and gives workers more flexibility in transferring pension assets upon changing job - Reforms of Government Pension Investment Fund (GPIF): Revised its asset mix policy and enhanced its governance structure 8

10 Asset management at decumulation stage - Post-retirement asset management In general, more emphasis on safety and liquidity, but depends on each individual s situation and preference (e.g. trade-off between longevity risk and liquidity risk, possibility of re-employment, health condition and estimated medical care costs, possibility of support from family members, need to preserve legacy, risktaking attitude toward asset price fluctuations, tolerance of future uncertainty, etc.) 9

11 Increase in demented elderly people (DEP) (Thousands) 12,000 11, % 10,000 8,000 7,300 8,300 9, % 10, % 34.3% 35.0% 30.0% 25.0% 6,000 4,000 4, % 5, % 6, % 20.6% 23.2% 20.0% 15.0% 10.0% 2, % No. of patients Prevalence rate Source: Cabinet Office, Government of Japan 0.0% 10

12 Management of DEP s financial assets How to manage financial assets held by DEP: suggestions from Financial Gerontology (FG) - Currently: Management of DEP s property is often entrusted to a guardian of the adult. inefficient management, misappropriation by guardians - FG suggests: Proactive approach before people become DEP : Encourage people to address their longevity risk before they become DEP by utilizing financial products and services such as deferred income annuity The Second GPIF for DEP : Set up a public fund to manage DEP s financial assets to raise their living standards by tapping into the capital market s functions 11

13 Key takeaways Longer-than-expected life expectancy and lower-than-estimated birth rate exacerbated difficulties caused by population aging. Population aging have significant impacts on the economy and society, particularly social security systems. Asset-building through self-reliant efforts and better management of seniors financial assets are gaining in importance. Some major reforms are underway and ideas being raised from various studies including financial gerontology. Opportunities for research to find better solutions to the difficulties caused by population aging. We wish to work with FC/IE practitioners around the world and share our findings. 12

14 Opportunities in difficulties Winston Churchill: A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Kites rise highest against the wind not with it. 13

15 Contacts: JSDA website: Questions through: -End- 14