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With corporate performance and the investment environment for pension funds being stagnant andmodifications to accounting standards being planned, the circumstances involving retirement pay mechanisms are unfavorable. In Japan, in similar circumstances in the past, companies tried to remove risk factors and financial pressure caused by retirement benefit liabilities. In the UK and US, traditional defined-benefit corporate pension plans have been terminated or frozen, and hybrid or funded pension plans have become prevalent in their place.
Retirement benefit schemes, mainly corporate pension plans, will transition into systems which can change the amount of payments according to market fluctuations and other factors, thereby transferring investment risks from companies to their employees. In terms of systems, this means increased utilization of or transitions into defined-contribution corporate pension plans and cash balance plans. The effect of this trend on the thinking and action of employees is not negligible. Employees must help themselves throughout their lives in preparing for the risks of changing retirement benefit payments.
Companies should proactively and continuously assist their employees to build assets so that retirement benefit reforms will not end up being mere transfers of investment risks from companies to their employees. Also, in order to encourage employees to make efforts to finance their retirement and compensate employees for such efforts, companies need to develop personnel systems that can reward employees according to their individual performance. It is important that such actions and measures are taken by both employers and employees to smoothly reassess the redistribution of risks among them. (Japanese)