Edited by Toshiaki Tachibanaki
* Robert L. Clark and Olivia S. Mitchell** 1. INTRODUCTION The Japanese population is ageing more rapidly than any other, and very low fertility rates going forward mean that this nation’s population will start shrinking within the next few years.1 International retirement system experts would do well to examine developments in Japanese retirement policies, so as to assess how employer-sponsored pensions fare in such a rapidly ageing society. Demographic change in Japan also places pressure on plan sponsors to eﬃciently manage pension funds and to oﬀer costeﬀective pensions that workers value. Government policy makers must monitor and revise national pension systems and develop appropriate regulations and tax policies for employer pension plans. Coordination of public and private retirement programs will be essential in the coming decades. Two important questions are addressed in the present analysis: how is the Japanese pension market for funded employment-based pensions evolving, and what additional steps are needed to strengthen public and private retirement plans? The Japanese pension system is one of the largest in the world, second only to that of the US pension market. Institutional public and employer pension assets in Japan have been estimated to be around US$3 trillion (Cerulli 1999; Conrad 2001), of which some US$0.6 trillion are in private plans (Sakamoto 2001a). But economic news has not been favorable for Japanese pension plans of late. Financial stagnation has sharply reduced asset values, lowered returns on bonds and other ﬁxed income assets, and raised unemployment rates.2 In addition,...
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