Japan’s MUFG Bank to Abolish System of Uniform Pay Cuts, Extend Retirement Age from 60 to 65

The Yomiuri Shimbun

16:01 JST, October 9, 2025

MUFG Bank Ltd. has decided to abolish the system of uniformly reducing employees’ salaries when they reach the age of 55 and extend the retirement age from 60 to 65, effective from fiscal 2027.

By facilitating pay raises even after age 55, the bank expects it will reduce the customary practice of seconding employees in their 50s to external posts, encouraging them to contribute within the bank itself.

The bank also plans to implement substantial pay increases for younger employees in an effort to secure talent across all age groups.

At MUFG Bank, about half the employees have left the bank in their early 50s and have been seconded to affiliated companies or business partners.

In the financial sector, this move is sometimes called a “one-way ticket,” because seconding is viewed as climbing off the corporate ladder.

Those who remained at the bank past the age of 55 — excluding certain executives — were required to reduce their responsibilities and accept a pay cut.

By abolishing the system that uniformly lowers employees’ salaries when they reach 55, employees can now receive raises if they remain at the bank and continue to work.

The bank expects more employees in their 50s, who would typically be seconded, will now choose to remain at the bank.

MUFG Bank will also improve conditions for younger staff. In fiscal 2026, the bank will give a more than 3% raise to employees, separate from the standard base increase.

This includes increases of up to about 7% for non-managerial staff, especially younger employees. Starting salaries for new university graduates will also increase to ¥300,000.

While the banking industry has seen a mass exodus of personnel hired during the bubble economy, from the late 1980s to the early 1990s, the advancement of digitalization has reduced labor-intensive tasks.

The bank aims to secure excellent talent by continuing to utilize experienced senior personnel within the bank, while also promoting younger employees based on their capabilities.