Shinzo Abe is on track to become the longest-serving prime minister in Japanese history in November 2019, having recently secured another three-year term as leader of the Liberal Democratic Party (LDP). With his legacy in mind, Abe is signaling a desire to use whatever remaining time he has left in office to tackle several politically difficult challenges. Near the top of his list is another round of changes to the nation's social security system, to counteract the effects of population aging. Abe is suggesting raising the retirement age (again) while also offering incentives to workers to remain active until age 70 and beyond.
Abe isn't the first Japanese leader to tackle the financial burdens associated with the country's growing number of elderly citizens. Japan's demographic transformation first came into view in the 1960s and 1970s and prompted an initial round of social security reforms in 1985. Those changes were quickly found to be insufficient because they were based on overly optimistic assumptions (from an actuarial point of view). The government conducted a series of mandatory five-year actuarial reassessments of the social security program from the 1980s to the early 2000s, and each of them showed the financial outlook getting worse relative to the previous forecast. In response to these projections, political leaders were forced to take up repeated rounds of benefit adjustments and tax hikes. Abe's initiative should be seen as another chapter in this decades-long saga of national reckoning with demographic reality.
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