Japan’s growing ranks of dementia sufferers are sitting on a mountain of frozen assets, creating personal dilemmas for loved ones fretting over how to handle that money and a drag on the nation’s economic prospects as the vast pool of wealth lays idle.
The pile of captive capital held by sufferers of Alzheimer’s and other forms of dementia in Japan swelled to 143 trillion yen ($1.3 trillion) in the year ending March 2018, according to research by Dai-Ichi Life Research Institute Inc. That’s equivalent to more than a quarter of the size of the overall economy.
It’s a problem on various levels. Relatives often feel overwhelmed by the responsibility of dealing with the savings and investments; policymakers must balance safeguarding the savings while ensuring they’re still used effectively to support economic growth; for brokerages the static savings represents lost business in an already shrinking market.
“This is going to have a massive impact on the economy,” said Kohei Komamura, an economics professor at Tokyo-based Keio University who studies approaches to finance in an aging society. “We need to create new societal rules, financial products, and financial advice systems that address the cognitive capabilities of the elderly.”
The problem of idled assets could be an even bigger headache in countries where people commit more of their savings to stocks: Japanese typically place about 15% of their assets in equities and investment trusts, according to Bank of Japan data, less than a third of the corresponding figure for Americans.
Brokerages and banks in Japan are starting to wake up to the existence of the pile of drifting assets. Mitsubishi UFJ Trust & Banking Corp., Nomura Trust and Banking Co. and others are trying to create a range of products that enable those with dementia to put their money in trusts, or bequeath assets at an earlier stage.
Some financial institutions are also following up on a government recommendation that sufferers’ should be allowed to split their accounts into living expenses and savings. The hope is that people who eventually act on behalf of those with Alzheimer’s will feel more comfortable using money that has already been designated to cover the sufferer’s living costs, leaving the rest available for investment.
Yet a government plan to encourage people to appoint family members, friends or lawyers as financial guardians for the more than five million Japanese who have dementia still has a pickup rate of less than 5%. Recognizing the plan leaves relatives in at the deep end of sorting out savings and investments, the labor and welfare ministry is trying to make the program less daunting by providing more support from legal experts and advisers.
The government is also concerned about the misuse of savings held by the aged.
Scamsters, largely targeting the elderly, defrauded Japanese people out of 20.2 billion yen in the first seven months of 2018, according to National Policy Agency data. In more than half those cases, the money was swindled simply by calling people up and saying, “It’s me, I’m in trouble.” People who transferred money to callers typically thought they were talking to a close family member.
Most banks have responded to the scamsters by limiting the amounts that can be transferred by ATMs each day and plastering warning notices around the machines.