Risk Management and Pension Plan Choice in Japan

Masaharu Usuki

Abstract —In previous studies, financial characteristics of plan sponsors and defined benefit plans have been found to affect asset allocation decisions in investment management. We examine the influence of these factors on plan design and choices of plan types in Japan. Our findings confirm that profit volatility, funding ratio, and pension plan size relative to a plan sponsor’s total assets, exert some influence on decisions regarding plan termination and put-back of the contracted-out portion of Employee Pension Funds in Japan.