Thought Tokyo stock prices could fall no further? Think again. Corporate pension managers are poised to sell between 2 trillion yen and 3 trillion yen worth of stocks in the coming months -- and think tanks estimate that figure could double.

The prospect of a massive selloff is terrifying business lobby groups and policymakers. Fearing that stock falls could seriously destabilize an already weak economy, they have proposed changes to corporate pension fund rules in a desperate bid to keep stock prices stable.

The proposal presents a tricky maze of pros and cons. Here are some basic facts to help make sense of the problems involved:

Q. Why are policymakers and business leaders blaming corporate pension funds for slumping stock prices?

A. Until April 2002, corporations were legally required to help manage a portion of public pension funds on behalf of the state. Companies now eager to hand those public funds back to the government are steadily cashing in their stocks ahead of October, when they can start returning the social security funds.

Pension managers and institutional investors anticipate that this kind of stock selling will drive stock prices even lower through September -- and some are trying to beat the crowd by selling early.

Q. Why are companies so eager to sell?

A. The public pension fund's payouts are fixed at an annual 5.5 percent. As long as stock prices and interest rates remained high and pension managers could beat that rate, companies could make a profit by pocketing the difference. But now, most corporate pension managers can't find investment havens that yield a 5.5 percent return, so they've been making up for shortfalls by tapping into workers' retirement funds to the tune of tens of billions of yen at large companies.

More than 500 corporate pension funds, out of 1,700 nationwide, have so far applied to the Health, Labor and Welfare Ministry to return as much as 8.5 trillion yen in public pension funds to the government. Between 2 trillion yen and 3 trillion yen of the total is invested in domestic stocks.

Q. Can't they just hand the stocks back to the government?

A. The government only accepts portfolios that closely track the broad Topix index of stocks and include at least 90 percent of the companies listed on the first section of the Tokyo Stock Exchange. For most smaller corporate pension funds, that would mean buying more stocks to meet the requirements. Firms are instead opting to return the public assets in cash, prompting share sales.

Q. How is the government trying to stop the selling pressure from growing?

A. The ruling coalition and business groups want to let firms return public pension funds earlier than scheduled, such as in June. They also want to ease the requirements companies have to meet to return funds in the form of stocks.

Q. How are the proposed changes supposed to help?

A. The logic is that allowing companies to start returning the funds earlier will shorten the period for speculative selling, as well as preventing such sales from coinciding with end-of-term selling. By making it easier for corporations to hand over public pension funds in the form of stocks, corporations may be able to avoid selling shares altogether.

The health ministry, however, opposes the idea of easing requirements for returning funds in the form of stocks, saying it would pose more of a risk to the loss-making public pension system, which supports retirees.

Q. Will these two measures really work?

A. Asset managers say tinkering with the timing of the handover will not help a great deal. The feeling is that most pension managers, especially at smaller firms, are still hesitant to sell at the moment. This proposal, however, could prompt them to begin selling earlier to prepare for the handover of the funds, and it may put yet more downward pressure on the stock market over the next few months. Loosening the rules for managers to return public assets may actually help more.