Japanese defined contribution (DC) plans will fail to create a gold mine of opportunity for foreign fund managers that have their hearts set on the country's asset management industry, according to consultants Cerulli Associates (CA).
This belief follows the announcement of a legislation that will enable Japanese corporations to establish DC schemes from October 1.
CA explained that slim tax incentives would restrict initial asset growth within the DC plans. The firm found that under the current blueprint for the new plans, occupational retirement scheme members will only be able to contribute YEN432,000 (roughly $3,500) per annum. CA compared this with US 401(k) plan arrangement whereby participants can in many cases contribute as much as $15,000.
CA said that DC plans will rely heavily on principal-guaranteed products and this would play into Japanese investment culture, which traditionally has favoured risk protection over return. Consequently, CA believes that 75% of net new inflows to Japanese DC plans will wind up in capital-protected accounts.
The firm concluded that domestic banks and insurers, given their size and their ability to build such products while maintaining profit margins, will likely dominate this portion of the marketplace.
By Janet Du Chenne
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.