Defined Contribution Access Swells in Japan

Beginning in 2017, millions more Japanese citizens will be able to set up private 401(k) plans. It’s estimated that nearly $10 billion will flow into the country’s private defined-contribution space over time.

From Reuters:

Starting next January, 27 million Japanese, including housewives and civil servants, will be newly eligible to set up private defined-contribution pension accounts. Currently, only the self-employed and workers who don’t have corporate-sponsored pension plans can set up private pension accounts.

It’s already proven something of a hit with the public. Since the law reform passed parliament in May, monthly web access to the 401k Educational Society, a non-profit that promotes defined-contribution pension plans, has surged seven-fold to 42,000, said Kayo Oe, the group’s chief researcher.

The change has the potential to attract as many as 9.4 million new users over time from 257,000 now, and generate an annual capital flow of up to 1 trillion yen ($9.46 billion) into the private-pension sector, according to Nomura Research Institute (NRI).

Many who wish to grow their plans do so by investing in both domestic and foreign stocks.

“How I see it is that the government won’t be able to pay that much in pensions anymore, so it’s telling us, ‘Go take care of it yourself. We can’t do it for you,'” a Japanese woman told Reuters.