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Mercer
Investment consulting, Japan DC, defined contribution

Contact: Hirota Ito
Tel: +81 3 5354 1437


New defined contribution (DC) limits in Japan


 

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The Japanese government has raised the legal maximum contribution limit being imposed on employer contributions to Defined Contribution plans as follows.

 

Current situation:

 

  • Employers are allowed to design a Corporate DC plan with a maximum monthly contribution per employee capped at JPY 46,000 (if the company does not sponsor an additional funded retirement plan), or at JPY 23,000 (if the company does sponsor an additional funded retirement plan).

  • No employee contributions are allowed.

 

The changes are:

 

  • The employer contribution caps will go up to JPY 51,000 (from 46,000 for companies with no other funded retirement plan), and to JPY 25,500 (from JPY 23,000 for companies combining the DC plan with another funded retirement plan).

  • The plan to amend the DC Law to allow employee contributions stalled as one of the Houses of the Diet has been dissolved and as a result the proposed laws under discussion have been scrapped.

 

Timing:

 

The changes on the contribution limits will be enforced from January 1, 2010.

 

For further information regarding this information, please contact the Retirement, Risk and Finance Consulting team at Mercer Japan.

 

Mercer is a leading global provider of investment services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and we work with the fiduciaries of pension funds, foundations, endowments and other investors in some 35 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure and implementation to ongoing fiduciary management.

 

 


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Business contacts

 

E-mail Hirota Ito

Telephone +81 3 8354 1437

 

E-mail Tomohiro Kawaguchi

Telephone +81 3 5354 5450


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