Get access to the exclusive HR Resources you need to succeed in 2018.
Sign up for free email newsletters and get more SHRM content delivered to your inbox.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 14 cities across the U.S. this fall.
Gain the skills you need to rise to the next level in your career. Jon us at SHRM's Leadership Development Forum, October 2-3 in Boston.
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Legislation to abolish employee pension funds (EPFs) deemed too risky to the country’s social security system passed the Japanese parliament in June 2013 and will be effective April 2014.
After a government committee report in July 2012, which examined EPFs in the wake of an investment-fraud scandal, the Ministry of Health, Labour and Welfare announced in September 2012 that it would examine measures to abolish the funds.
According to global HR consultancy Towers Watson, the legislation calls for:
EPFs are supplementary occupational pension plans operated voluntarily in Japan and cover private-sector employees only. The funds were introduced by law in 1965 to offer an additional benefit to the government-run public pension system.
Among Japan’s 34.5 million private-sector employees, 4.37 million (12 percent) were covered by EPFs as of March 2012. The percentage has been declining over the years, Urata said. The number of pensioners in EPFs is 2.93 million; there were 560 EPFs as of March 2013.
Employers Need to Act Now
Multinationals with operations in Japan should determine whether their local offices are participating in EPFs, and if they are, the companies should consult a professional advisor to fully understand the implications of the new legislation, Urata said. He advised seeking counsel from third-party professionals, rather than from plan administrators.
“The deteriorating funded status of EPFs and the increasing financial burdens on participating employers over recent years have prompted some foreign multinationals to withdraw from their EPFs by paying a one-time withdrawal fee; however, it may now be preferable to wait for the dissolution of an EPF, rather than withdrawing and paying a fee,” Urata suggested.
Employers with defined contribution plans in Japan should also monitor the issue, as these plans could undergo changes in the future when EPFs are effectively abolished.
“Since detailed regulations are scheduled to be released this year, employers should closely monitor the development,” Urata said.
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
SHRM Online Global HR page
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 10,000 companies