The government approved legislation Friday to introduce a Japanese version of U.S.-style 401(k) pension plans providing for tax breaks aimed at encouraging firms and workers to take up the new programs, officials said.
Under 401(k)-style pension plans, contributions are defined but benefits to be paid after retirement hinge on investment returns, in contrast to existing Japanese plans in which benefits are defined but contributions have to be increased if investment returns taper off.
Also unlike conventional plans, workers would be able to choose investment targets and move the assets they build up in their own pension accounts when they change jobs.