## Overview Outline of Corporate Pension Plans, etc

## [Employees' Pension Funds]

The Employees' Pension funds are special corporations established with the approval of the Minister of Health, Labour and Welfare. The funds substitute a part of the Old-Age Employees' Pension (the portion excluding the indexed and sliding Pay scale portions) and Pay their own supplementary benefits. Figure 1 shows the benefit to be provided to a subscriber of the Employees' Pension fund, compared to that to be Paid to a non-subscriber.

Contributions necessary for benefits are collected by employers and borne by employers and subscribers. The employers who have established Employees' Pension funds are exempt from payment to the government of the premium of Employees' Pension insurance corresponding to the substitute benefits. The employers pay contributions necessary for benefits to be paid by the fund including the substitution portions.

Figure 1: Structure of Employees' Pension Fund Benefits

(Non-subscriber)	(Subscriber)	(Subscriber)
Employees' Pension (Old-Age Employees' Pension)	Substitution portion	Paid by the fund
Paid by State	Employees' Pension (price and wage indexation portion)	Paid by state
National Pension (Old-Age Basic Pension)	National Pension (Old-Age Basic Pension)

## [Defined Benefits Corporate Pensions]

There are two forms of corporate pension plans: contract-type pensions and fund-type corporate pensions. Under Contract-type pensions, Pension funds are managed and invested outside of the mother company by concluding contracts between the employer and trust and life insurance companies, on the basis of mutual agreement between labour and management. Under fund-type Pension Plans, pension funds are managed and invested by the fund, with the benefits paid from the fund. (The fund will not substitute Employees' Pension businesses.)

The Defined Benefits Corporate Pension Law stipulates the following Provisions for the Protection of eligibility.

• Reserve obligations: A certain level of Pension assets has to be accumulated. Actuarial revaluation and validation is required. When there is a shortfall in pension reserves, this shortfall must be made up.

• Obligations of the trustee: In relation to the administrators and investment managers such as business owners, responsibilities to Participants and clear principles on actions are stipulated.

• Disclosure: The business owner is required to disclose the situation regarding investments to participants and to report the same to the Minister of Health, Labour and Welfare.

## [Defined Contribution Pensions]

Under defined contribution Pension Plans, the contributions paid are clearly defined for each individual, assets are managed personally by a participant and the amount of benefits is determined according to the investment returns. This system consists of two types of Pension funds: The corporate "type pension funds managed by employers for their employees and the personal-type pension funds managed by the National Pension Fund Federation for the self-employed and employees of companies without corporate-type Pension plans.

Employers contribute installments (contributions by participants is also possible if provided for in their contracts) under corporate-type Pension schemes, whereas individual participants pay installments under Personal-type pension schemes within the limits set for their contribution. Contributions paid shall accumulate for each participant and the participants can provide individual instructions on investing their contributions. The amount of benefits administered is determined according to the amount of contributions and the investment returns. Benefits are paid in the form of old-age benefits and disability benefits.

## [Tax-Qualified Pension Plan]

The Tax-Qualified Pension Plan was established in 1962 as a system to use with pension benefits being provided to employees after having obtained approval from the Director General of the National Tax Agency that any contracts concluded between an employer of a company and trust and life insurance companies satisfy certain requirements. The Tax-Qualified Pension Plan was abolished on March 31, 2012.

## [National Pension Funds]

The system under which self-employed persons voluntarily pay extra on the national pension premium to expand their income security after retirement was established as the National Pension Fund pursuant to the law revision in 1989 and has been implemented since April 1991. No.1 insured persons of the National Pension Plan are eligible to participate in the National Pension Fund, categorizing into 2 types - the regional fund established in each region by the organization of those who live in the same prefecture and the vocational fund (one fund in the country) established by the organization of those who are engaged in the same type of industry or occupation.