The Future of Corporate Pensions in the United States and Japan

The Japanese pension market is one of the largest in the world, second only to that of the United States.  However, with the Japanese population aging rapidly, securing old-age provisions has become increasingly difficult.  Public pension benefits have been curtailed substantially in recent years, whereas new corporate pension legislation is aimed at increasing the role of employment-based pensions within a new public-private pension mix.
The most recent regulations regarding the Japanese corporate pension market have been influenced strongly by the US experience, and hopes are that the Japanese pension market might achieve results similar to those experienced by the US market since the mid-1970s.  However, prospects for future returns seem less promising given the current slowdown of world stock markets and the uncertainty regarding the extent of financial scandals that have occurred in the United States (e.g., Enron, WorldCom) and Europe (e.g., Ahold).  These concerns have observers wondering whether and how corporate pension plans can adapt to these challenges so that they can effectively manage their funds in the best interest of their sponsors.  By comparing recent developments in regulations and practices in the US and Japan, this symposium addresses these issues from a comparative perspective: What role should pension funds play in corporate governance? How and where can pension funds invest to overcome the current slump in stock markets? What are the likely effects of demographic changes on pre-funded pension plans? What kind of regulatory changes and tax policies are necessary to ensure stability and growth in future?

In co-operation with Nikko Financial Intelligence, Inc.