Living in the past; paying with the future
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Living in the past; paying with the future

Like so many other aspects of Japan’s financial system, its pensions schemes are paying for the sins of the past and struggling to pay for the future. Existing reforms do not go far enough, says Chris Leahy, and flirt dangerously with the country’s future prosperity.

Asia's wall of money [part 1]

Thais spar over pension reforms [part 2] Japan emerges from the shadows | A new generation embraces M&A | Nikkei heads for 24,000 by 2010... or soonerDebt is not a dirty word | Funds get activist in Japan 

      The rise of private defined contribution 

      Falling through the cracks

JAPAN MIGHT HAVE suffered from a lengthy and debilitating recession, but there’s no mistaking the fact that the world’s second-largest economy is still a wealthy country. Despite years of deflation, a frugal supper in the back streets of Tokyo will still cost as much as a smart dinner for two in most western cities, the price of a coffee will make you think twice about answering Starbucks’ siren call and it is inadvisable to step into a cab: London taxis look like a bargain by comparison.

But the veneer of wealth that coats Tokyo and its nation of almost 125 million is slowly and almost imperceptibly beginning to wear thin. Japan’s demographic statistics are frightening. Caught in the pincer of a rapidly falling fertility rate that now stands at 1.3 babies per female and a relentlessly increasing longevity rate (around 80 years for men, almost 90 for women) Japan’s pension system is in greater need of reform than that of any other developed country.

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