Staff writer

Many Japanese firms appear to be still wondering whether they should adopt new retirement plans for their employees. Some even feel the need to review the whole personnel system, including salaries.

Japan Pension Planning Co. provides consultation services to meet such a broad range of needs. Adopting a Japanese version of the U.S. 401(k) retirement plans is just one option the firm will recommend to its corporate clients, according to its president, Kiyoshi Ogino.

“We will be doing business, from entrance to exit,” Ogino said in a recent interview, describing the wide scope of the firm’s pension business.

Eventually, JPP will offer services for the new retirement plans, ranging from record-keeping of individual accounts to preparing menus of investment products for company employees.

But he also said it may outsource part of the service, such as the call-center function for individual customers, to an affiliated firm.

“Before next fall, we will probably focus on consultation about basic corporate problems,” he said. One of the biggest issues worrying employers is how to cope with stricter accounting rules that take effect during the business year beginning next April, he added.

Firms will have to disclose their future obligation to pay pensions under the new rules. JPP can, for instance, project the amount of obligation in a 10-year span and its impact on a long-term management plan, Ogino said.

Defined-contribution retirement plans modeled on the 401(k) plans of the United States are expected to debut in Japan as early as next fall.

In the planned Japanese version, employers will regularly set aside pension premiums for individual workers, who choose investment tools at their own risk. A portion of the premiums may be tax-
deductible. The self-employed and housewives can also join similar plans.

Benefits depend on investment results, unlike in conventional defined-benefit plans, which are fixed.

JPP, with a staff of 24, was jointly launched in September by Sanwa Bank, Toyo Trust & Banking Co. and Daido Life Insurance Co. The three institutions have long held a close business relationship.

The joint venture can help form a wide customer base, said Ogino, who comes from Toyo Trust. As one of the nation’s major trust banks, Toyo Trust has knowhow in managing conventional pension plans. Sanwa is a large bank with an extensive urban network and Daido Life is a midsize insurer.

The new firm expects the size of the defined-contribution market to grow by March 2006 to 6.6 trillion yen, in terms of net assets. It aims to grab a 15 percent share, Ogino said.

These figures assume that some 40 percent of new money for corporate retirement funds will be put into defined-contribution plans.

The firm expects to enter the black in the year to March 2003, Ogino said.

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