Japan's Ministry of Health and Welfare expects by July to wrap up a yearlong study and prepare an internal report on suggested changes to Japan's corporate pension system.
A report being prepared by the ministry's employee pension fund system study team could cover some or all of several issues now being explored. According to Ryu Jubishi, New York representative for the ministry, specific issues being covered center on:
*Finding ways to stabilize the funding of pension plans, especially in light of the recent poor performance of Japan's stock market;
*Determining whether money managers, plan sponsors or others will be responsible for pension fund management;
*Examining the regulations of pension fund managers; and
*Exploring strengthening the existing pension payment guarantee system.
One problem under the stabilization issue is the requirement that pension sponsors guarantee an annual 5.5% return on pension assets. In light of market performance, the team is examining whether the rule should be amended. In addition, it's possible companies could be allowed to decrease plan benefits - which is not possible now.
Another stabilization issue is the possibility of encouraging more coordination between corporate and public pension funds.
For example, if performance of corporate funds - which tend to be more heavily invested in stocks - strongly outpaces public fund performance during a strong market cycle, corporate funds could provide some assets to the public sector. If public funds outperform, they could move assets to corporate funds, Mr. Jubishi said.