Japan recently took an interesting step when dealing with its ageing population. The Japanese government policy on the elderly released Wednesday, January 17, said people should be allowed to delay the age they start receiving public pensions, to over 70, with the government hoping they will continue to be part of the labour force even after retirement. This is similar to what Canada does with its Canada Pension Plan. In Canada, the standard age to begin receiving a CPP retirement pension is age 65, which is the month after your 65th birthday. However, you can take a reduced CPP retirement pension as early as the month after your 60th birthday.
You can also take an increased pension if your benefit starts after reaching age 65. The amount of your pension will depend on how much and for how long you have contributed to the CPP and on your age when you want your pension to start. If you take it before age 65, your pension will be reduced, by up to 36% at age 60. If you take it after age 65, your pension may be larger, by up to 42% at age 70
In Japan, the elderly start receiving pensions from 65 in principle but can choose to start at any time between the ages of 60 and 70. The monthly total increases the more the starting age is delayed, which is the same as Canada.
The reason given by the government of Japan is that the general trend of uniformly seeing those aged 65 or over as elderly is losing credibility. The governments aim is to create an ageless society where people of all generations can be active according to their wishes.
One of the keys to this ageless society is the expansion of the right to choose when to receive a public pension has great significance in a changing society If individuals can choose to delay retirement and get more money on a monthly basis later in life, it could give them a feeling of security about living longer and one of the side benefits is less money being paid to seniors by the government over time.
The new policy is being formulated as the nation’s population demographic ages in an unprecedented manner amid a declining birthrate. In 2025, one in every three people in Japan is expected to be 65 or older, compared to 1 in 6 in the USA and 1 in 4 in Canada
In 2004 the government adjusted pension payments based on the average life expectancy and the number of people of working age. The introduction of this 2004 law had already decreased the amount that seniors can collect from pensions.
All western countries are faced with super-ageing societies and the current social security system should be reformed. In Canada, we are encouraging people to take their pension later as they do in Japan. In Canada, we are also increasing the amount of money people pay into the Canada Pension Plan so they will be able to collect more when they retire. In Japan, the government is taking steps to facilitate re-employment of the elderly, including offering loans from the government-affiliated Japan Finance Corp. for those who want to start businesses and setting up consultation desks for seniors at Hello Work public job placement offices. The outline contains a numerical target to increase the rate of employment among those aged 60 to 64 — to 67 percent in 2020, up from 63.6 percent as of 2016.
The government will also promote measures to enhance seniors’ well-being and reduce their need for nursing care, while steps to prevent their isolation in communities have also been included in the outline.
Despite the range of new policies, convincing people to forgo retirement may be a difficult task and the approach they are taking is not working. The Health, Labor and Welfare Ministry has admitted that only a small number of seniors have chosen to delay retirement so far. By encouraging people to work longer both Canada and Japan are using interesting techniques to keep pension costs under control. The question is will seniors pay into the idea of working longer for a bigger payout?
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