Chapter

Chapter Chapter <b>Risk Management and Pension Plan Choice</b> <b>Risk Management and Pension Plan Choice</b> <b>in Japan</b>

Masaharu Usuki

in Reinventing the Retirement Paradigm

Published in print August 2005 | ISBN: 9780199284603
Published online February 2006 | e-ISBN: 9780191603013 | DOI: http://dx.doi.org/10.1093/0199284601.003.0015
Chapter  Chapter   Risk Management and Pension Plan Choice   Risk Management and Pension Plan Choice   in Japan

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This chapter assesses whether changes in benefit design were influenced by sponsors' desire to control financial risk. It considers several plan financial characteristics that affect risk tolerance and asset allocation decisions, such as the funding ratio, and determines whether these variables influence decisions regarding plan termination and put-back of the contracted-out portion of Employee Pension Funds (EPFs). In particular, the chapter examines the hypothesis that plan sponsors have altered the plan type they offer to control risks in pension management. It is shown that the pension plan's funding ratio, volatility of the plan sponsor's return on equity, and the size of the pension plan relative to the plan sponsor's total assets exert an influence on decisions to change pension plan types.

Keywords: pension plans; defined benefit plans; retirement income; Employee Pension Funds; pension plan sponsors; risk management; funding ratio

Chapter.  6768 words.  Illustrated.

Subjects: Financial Markets

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