Effects of the Japanese Financial Crisis on Pensions

Abstract

The crisis: In Japan, a bubble of stock and land prices burst in 1989-1990, leading to nonperforming loans and solvency problems for financial institutions and related companies. The slow reaction of Japanese authorities and the parallel deregulation of financial activities led to economic recession in the period from 1998 to 2002. Key issues for comparison: The financial crisis combined with an aging society led to sustainability problems within the pension system. Key lessons: Financial crises affect peoples’ savings, necessitating structural reforms of pension provision.