NU Online News Service, July 6, 1:13 p.m. – Cerulli Associates, Boston, says foreign investment companies may have a tough time profiting from Japan’s shift toward “defined contribution” retirement plans.
Today, most Japanese pension plans are traditional defined benefit plans. The employer sets benefit goals and arranges contributions and investments accordingly.
The Japanese government is now talking about permitting 401(k)-style defined contribution plans. An employer would contribute a set amount, and the benefits would depend on the plan’s investment performance.
Japan faces severe pressure to shift to the defined contribution approach, because its economic slump has hit traditional pension plans hard, according to a new Cerulli report on the global retirement services market.