Friday, July 10, 2015

Japan's Retirement Fiasco

A story in the Wall Street Journal describes the activities of Hiromichi Mizuno, the current chief investment officer of Japan's public pension fund (social security, if you like).  The fund has $ 1.1 trillion, which sounds like a lot until you realize that there are 67 million Japanese participating in the plan.  Simple arithmetic tells you that the fund is holding little more than $ 16,000 per participant.  Given the aging of Japanese society, this suggests big trouble ahead.

Japan has the highest debt/GDP ratios in the developed world, so there isn't much room for Japan to operate on other people's money.  Additionally, Japan's economy has been stagnant for several decades following the usual pattern of countries who rely heavily on the government to stimulate their economies.

Meanwhile, the WSJ article is about all the interesting things that the well-paid, smooth-talking, Mr. Mizuno plans to do with the pension fund's money.  Does it really matter?  Japan's future retirees would be better off planning not to retire than to depend upon this charade.

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