Wharton Pension Research Council Working Papers

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Working Paper

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This paper investigates the events leading up to the passage of defined contribution pension legislation in Japan in June 2001. Expectations ran high that defined contribution (DC) legislation would induce a massive wave of DC plan conversion as Japanese companies began unloading their traditional defined benefit (DB) plans. However, despite the continuing pressures on Japanese companies, such a widescale movement did not occur. What appeared as a clear solution in the new DC option, then becomes a puzzle given the lukewarm response in Japan. Here I argue that the main determinant of corporate decision-making on the pension issue was the binding constraints of the DC legislation, not the paternalistic ways of Japanese companies. In broader strokes, this analysis also sheds light on the nature of policymaking in Japan today.

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©2004 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved.


The author is grateful for research support from the Lauder Institute and the Pension Research Council of the Wharton School of the University of Pennsylvania, and for comments from Jennifer Amyx and Olivia Mitchell. She also benefited from discussions from many Japanese pension experts, including Haruta Urata, Kenji Sekine, Hiroshi Maruta, Kuniya Tsubota, Koji Yano, Masaharu Usuki, and Kiyoaki Fujiwara. Any errors remain the author’s own.

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Date Posted: 30 August 2019