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Captive capital held by dementia sufferers in Japan swells to $1.3 trillion in FY2018

Kohei Komamura, an Economics professor at Keio University who studies approaches to finance in an aging society said that this is going to have a massive impact on the Japanese economy.

twitter-logoBusinessToday.In | October 17, 2018 | Updated 13:59 IST
Captive capital held by dementia sufferers in Japan swells to $1.3 trillion in FY2018
PC: Reuters

Japan has a unique problem. Its growing populace of dementia sufferers has increased its frozen assets manifold. Not only is this a hurdle for the Japanese economy, it is also creating difficulty in the personal lives of people as the loved ones of these people are fretting over how to handle the money.

As mentioned in a report in Bloomberg, captive capital held by patients of Alzheimer's and other forms of dementia in Japan had risen to $1.3 trillion, by end of March 2018. The finding revealed by Dai-Ichi Life Research Institute Inc said that the amount is more than a quarter of the size of the overall economy.

The report states that this is a problem that has seeped into various levels. For instance, at a personal level, relatives of such sufferers are overwhelmed by the sheer responsibility of the task of managing savings and investments. Then there are the policymakers who must keep in mind the personal savings of these citizens as well as push for using the same money to boost the economy. When it comes to brokerages, such static savings signifies loss businesses in a market that is already shrinking.

Kohei Komamura, an Economics professor at Keio University who studies approaches to finance in an aging society said that this is going to have a massive impact on the Japanese economy. He said that new societal rules, financial products and financial advice systems that addresses the cognitive capability of elderly is the need of the hour.

Companies like Mitsubishi UFJ Trust & Banking Corp and Nomura Trust and Banking Co. are trying to create a range of products to help dementia sufferers to put their money in trusts or bequeath assets earlier in life. Some financial institutions are following up on a government recommendation that dementia sufferers should be allowed to split their money into living expenses and savings in the hope that people who handle these accounts eventually will be more comfortable using the money.

However, a government plan to appoint close ones as financial guardians is seeing no takers. The labour and welfare ministry is now trying to make the programme easier by offering more support from legal experts and advisers.

On top of that the government is also concerned about scamsters.  Such fraudsters have scammed Japanese people out of 20.2 billion yen in the first seven months of 2018 by mostly targeting the elderly, as mentioned in the National Policy Agency data.

Nomura Holdings and Keio University have started a joint research on the effects of ageing to improve understanding of the behavioural patterns and characteristics of the elderly.

The problem only intensifies from hereon. Mizuho Research Institute Ltd said that 50% of securities and 40% of all financial assets in Japan are expected to be held by those over 70 years of age.    

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