The slump in the stock market and other unfavorable investment conditions prompted 291 companies to adopt 401(k)-style pension plans in fiscal 2002 to reduce their financial burden, up from 70 the previous year, according to a government report compiled Wednesday.
Since 401(k)-style pension plans were introduced in Japan in October 2001, a total of 361 firms have adopted the defined-contribution pension schemes, whose benefits hinge on investment returns.
Under conventional defined-benefit pension programs, the sponsoring company is responsible for ensuring the payment of promised benefits if investment returns fall short of assumed levels.
Faced with a deteriorating investment environment, an increasing number of companies are shifting to 401(k)-type schemes in which the sponsoring firm provides basic funds while employees invest part of their pay in bank deposits, investment trusts and other financial instruments of their choice and are responsible for the results of their investments.
The Health, Labor and Welfare Ministry report shows that between 11 and 30 companies shifted to 401(k)-type plans per month in each of the first 11 months of fiscal 2002, which began in April 2002.
In the book-closing month of March, 85 companies adopted the pension schemes.
The number of employees covered by 401(k)-style plans totaled some 308,000 at the end of February this year, according to the report.