JAPAN - Japanese pension plan sponsors have restored funding ratios to healthy levels and are exploring hybrid benefits structures such as cash balance plans, according to Greenwich Associates.
Tomio Sumiyoshi, consultant, Greenwich Associates, said 21% of corporate sponsors reported they had closed their defined benefit plans to new employees, up from 12% two years ago.
"Unlike other markets such as the United States, defined contribution is not becoming a big deal in Japan. Instead, Japanese employers appear to be most intrigued by the concept of hybrid plans, including cash balance structures," said Sumiyoshi.
Also, data released by Mercer has highlighted the broad increase in social security retirement ages as governments move to reduce their social security costs in response to increased longevity.
Vanessa Wang, Mercer's retirement leader, Asia (ex Japan), said: "The ageing population trend we are seeing globally is compounded in Asia due to increased longevity and scale of the population."
Particularly China, South Korea and Japan are experiencing this phenomena and it is putting pressure on Governments to review retirement provision. We expect to see Asian Governments making legislative changes and pension plan sponsors will need to respond," Wang said.
Japan has gradually been increasing the retirement age under Employees Pension Insurance from 60 to 65.
For company-sponsored retirement plans in Japan, the normal retirement age is gradually being extended from 60 to 65 between 2006 and 2013.
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