(Mainichi Japan) February 16, 2012
Bismarck's pension system

The world's first modern pension system was introduced by Chancellor of the German Empire Otto von Bismarck in the 19th century. The move was designed to propitiate the German people at a time when the newly forged empire was trying to stamp out the rising appeal of socialism.

Bismarck's pension system was based on the assumption that workers would pass away just a few years after retirement in their mid-50s on, according to Michael W. Hodin, a member of the U.S. Council on Foreign Relations.

Since people at the time had a shorter lifespan, the government did not have to spend much money on pension benefits. One theory has it that Bismarck even set up the system with the aim of diverting part of the pension premiums to help finance Germany's hefty military expenditures.

In the United States, President Franklin D. Roosevelt introduced a pension system in 1935 under the Social Security Act. Under the system, pension eligibility started at 65. However, since the average lifespan in the country was 61 at the time, only those who lived very long lives were around to collect.

University of Tokyo professor Fumiaki Kubo says pension systems were originally set up to support those who lived longer than average. In other words, pension systems were part of policy measures to care for those who grew too old to work.

Currently, the average lifespan of a Japanese woman is 86.39 years, while that of a Japanese man is 79.64. If the spirit of Bismarck's pension system were applied, Japanese women would become eligible for benefits at the age of about 88, and men at around 82.

Bismarck's and Roosevelt's systems would not be worthy of the term "pension" as it is understood today.

The social security programs we now have are far better than those introduced by these two bygone leaders, but may also be a bit too generous.

Japan can sustain its pension programs right now because the ratio of premium-paying workers to pensioners is three to one. However, the ratio will be one to one in the not-too-distant future. If social programs remain as they are now, this will put an unsustainable burden on workers paying premiums.

Considering these problems, we can no longer laugh at Bismarck's stinginess. Any great social security program is meaningless unless it is sustainable.

The government's plan to reform the tax and social security systems together, which has created great confusion and disturbance in the Diet, is aimed at reducing costs and increasing income. Nevertheless, discussions are focused excessively on a consumption tax hike to increase revenue while failing to come up with concrete cost reduction ideas.

For example, Japan has delayed a decision on raising the pension eligibility age, though Germany has hiked its eligibility age from 65 to 67. In other words, Japanese political leaders are avoiding a decision that would be highly unpopular among the elderly.

Bismarck says, "People never lie so much as after a hunt, during a war or before an election."

(By Michio Ushioda, Expert Senior Writer)
毎日新聞 2012年2月15日 東京朝刊

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