The Introduction of Employee Contributions to Defined Contribution Pension Plans

Abstract:     
On 4 August 2011 the Japanese Diet passed an amendment enabling company employees to contribute to corporate defined contribution pension plans. Until then only employers were able to contribute. As a result of the amendment, however, plan participants are able since January 2012 to make their own contributions to their own plan accounts. As this represents a valuable opportunity for plan participants to build up a pension fund (contributions are exempt from tax), employers should consider introducing it as soon as possible. We hope the move will lead plan participants to take a greater interest in defined contribution pension plans and also encourage more companies to introduce them.

Number of Pages in PDF File: 5

Keywords: defined contribution pension plan, employee contribution, Japan

JEL Classification: G23, G28

Accepted Paper Series