Demographic Changes and Life Insurance Business in Japan--- Series 2: Prepare for the Coming of An Aging Society ---Japan’s public pension system in a form of social insurance was started
during the Second World War as a Workers Pension System according to theWorkers Pension Insurance Act enacted in 1942, which was renamed as theEmployees’ Pension Insurance Act in 1944 and significantly revised in 1954
since when a fixed amount of pension payment was introduced and for the firsttime, benefit payments for the elderly
werecommenced.

Theuniversalpublic pension system which covers
self-employed

andagriculture,

forestry

workers
andin

fishery

industries, was established in 1961
according to the enforcement of theNational Pension Act.
Benefit payment level of the public pension had been successively improved
during the high-growth period of Japanese economy, while no increase inpremium payment had been required. Namely, the monthly amount was raised
to 10 thousand yen, 20 thousand yen and then to 50 thousand yen in 1964,
1969 and 1973 respectively. Moreover, a price-index linking system for pension
benefit was introduced in 1973 according to which the amount of pensionbenefit will be evaluated in response to wage and price growth.
Meanwhile, increasing needs for corporate annuity insurance had been
observed since 1963 when the so-called Tax-qualitied Pension Plan waslaunched after some revisions in the Corporate Tax Law and Income Tax Law
were conducted in 1962. In addition to the increasing concerns on old-age

corporate annuity insurance was considered as a means for securing labor1

income security arose after the implementation of the National Pension Plan,force and/or high quality labor force during the rapid economic growth period.
On the contrary, in the personal lines, annuity insurance as a single productwas not so popular during the 1960s and 1970s since its first release in 1960,
whereas as a rider had a very wide popularity.

On the other hand, a trend toward the nuclear family was accelerated by
the progress of urbanization associatedwith the economic development from1960s.

For

instance,theaverage

number of household members had
been stably maintained at the level for 5
people from 1920s to 1950s but began
to fall in the late 1950s and became below 4 people from 1966 onwards. Thenuclearization of the family is generally considered as one of the factors
responsible for the increasing needs for death-benefit-focused productswith a large amount of coverage in 1970s, namely various types of term life
insurance as a rider or as a single product and various types of whole life
insurance policies gradually became popular.
Giving the fact that Japan entered the Aging Society in 1970 when theproportion of population aged 65 and above became 7.1 per cent, however,the problems of declining birth rate and the aging population had not drawn
too much attention until the 1980s after the proportion of population aged
65 and above reached 9.1 per cent in 1980.
As measures coping with therapidlyaging

society,

severalimportant revisions regarding thepublic pension system, such as
the introduction of basic pension
by integrating all the public pension plans while enforcing participation ofage of women for the Old-Age Employees’ Pension from age 55 to age 60 by2

dependent spouses of employees to the system and the rise in pensionable2000, were conducted in 1985.
Meanwhile, preferential taxation policies for individual annuity insurance
products and five-year single-premium endowment insurance products
were released in 1984. For example, according to the new policies,
individuals are allowed to claim tax deductions for paid-up annuity
premiums, or maturity proceeds of five-year single-premium endowment
insurance products will be taxed as an occasional income. As a result, bothtypes of life insurance products had gathered tremendous popularity andachieved a significant growth.

To be continued…

3

YingYing Jiang, Ph.D. in Commerce of Hitotsubashi University.