With nest eggs that hold the promise of fresh demand, the many baby boomers starting to retire this year may be a boon for manufacturers, travel agencies and banks, but it is another story for the financially troubled local governments on the hook for paying retirement allowances to their employees.
About 87,000 local public servants, including schoolteachers and police officers, are among the estimated 2.2 million people reaching age 60 this fiscal year. The huge amount of retirement allowances that local governments must pay to the retirees is weighing heavily on their already strained fiscal conditions.
To resolve the situation, the Internal Affairs and Communications Ministry revised the law in 2006 to ease legal restrictions on issuing local government bonds as a temporary measure through 2015, giving prefectures and municipalities a new source of revenue.