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Topic:
0. Overview - Contents
Corporate Pension
Life Insurance
Low Interest Rate
Consequences
Measures
Fund Deficit
Cash Balance Plan
Shift from DB to DC
10%
5%
0%
1989
1994
1999
5 yr
2009
2004
10 yr
20 yr
2014
3
Agenda
Contents
Introduction
Life
Insurance
Corporate
Pension
p.6
p.10-11
Current Situation
p.7-8
p.12-13
p.20
p.15-16
p.21-25
p.17-18
4
Agenda
Contents
Introduction
Life
Insurance
Corporate
Pension
p.6
p.10-11
Current Situation
p.7-8
p.12-13
p.20
p.15-16
p.21-25
p.17-18
5
Main Products
China
Participating endowment
Traditional saving products
South
Korea
Personal illness
Whole life
Annuity
Singapore
Endowment
Whole life
Term life
India
JGB Yield
10%
Asset at
Net Asset at
insolvency insolvency
2,100
(303)
Year
Company
1997
Nissan
1999
Toho
2,800
(650)
4%
2000
Daihyaku
2,100
(318)
2000
Taisho
200
(37)
2%
2000
Chiyoda
3,500
(595)
2000
Kyoei
4,600
(690)
2001
Tokyo
690
(73)
Burst of Japan
Economic Bubble
8%
6%
0%
1989
2014
5.0%
0.0%
1990
1995
2000
2005
2010
Improve profitability
of new business
2015
Liability
Asset
2004
2006
2008
2010
200
100
1994
2004
2014
45.0%
Foreign
25.0%
Domestic
5.0%
Ratio of Foreign
Source: LIAJ
Agenda
Contents
Introduction
Life
Insurance
Corporate
Pension
p.6
p.10-11
Current Situation
p.7-8
p.12-13
p.20
p.15-16
p.21-25
p.17-18
9
CP
EPI
NP
Member
Pension
Age
Replacement
rate
Specific
Employees
60~65
Employees
All persons
6065
6065
Economic stagnation
Decreasing population
Longer life expectancy
[2014]
62.7%
[2044]
51.0%
Benefit
Adjustment
Corporate Pension
Public pension
1.Employees Pension Insurance
2. National Pension
Number
(EOY2014)
13,883 plans
4,635 plans
Benefit
Determined in advance
Employer
Investment
Additional
loss
contributions
Employee
Investment
risk bearer
Investment
loss
Expected
investment yield
Investment
performance
Investment
performance
Save up
Benefit
reduction
Payment
Save up
Payment 11
2.95
1.55
Gap
1.75
2007
1.76
Gap
1.93
1.19
2.50
2009
2010
0.57
2011
2012
2013
2014
Lower
Interest
Rate
Slightly Down
Down
Wider
Gap
Fund
Deficit
12
Scheme
Contribution
Risk transferred
Deficit
Investment
performance
Additional
contribution
Benefit
Save up
Payment
Shift from DB to DC
Number of Corporate
Pension Members
(million)
10
5
0
(End of FY)
8.0
7.3
3.7
2010
4.2
2011
8.0
4.4
2012
7.9
4.6
2013
7.8
5.1
2014
DC
DB
13
Agenda
Contents
Introduction
Life
Insurance
Corporate
Pension
p.6
p.10-11
Current Situation
p.7-8
p.12-13
p.20
p.15-16
p.21-25
p.17-18
14
1989
1994
1999
2004
2009
5 yr
10 yr
20 yr
1.5%
1.0%
Announced
(2016/1/29)
0.5%
2015/10/1
5 yr
Applied
(2016/2/16)
<Background>
Extended period of deflation
Poor economic growth
In early 2016
Unstable financial markets
caused by volatile global
situations (oil price, )
Accelerating monetary easing
policies
0.0%
-0.5%
2014
10 yr
20 yr
Negative
Interest Rates
15
Employers' risk
14.3%
11.0%
10.0%
5.0%
0.1%
0.0%
8.7%
10.9%
1.2%
2.0%
Fund Deficit
5.0%
2009
2010
2011
2012
2013
2014
2015
Liability Increase
91 trillion
5.1% UP
2015.3
2016.3
16
Employers
Risk
Investment
performance
Payment
Save up
DB
DC Structure
Expected
investment yield
Benefit
Reduction
Employees
Risk
Investment
performance
Save up
DC
Payment
17
Risk
share
Investment
performance
Save up
Additional Contribution
(Employers Risk)
Payment
Employers' risks
Plan
Law
Accounting
DC Defined Contribution
Employees risks
18
Agenda
Contents
Introduction
Life
Insurance
Corporate
Pension
p.6
p.10-11
Current Situation
p.7-8
p.12-13
p.20
p.15-16
p.21-25
p.17-18
19
1.60%
1.40%
1.20%
Regular Prem
1.00%
0.80%
0.60%
0.40%
Boost Liability
0.20%
10-yearJGB rate
0.00%
-0.20%
2012.3
2012.9
2013.3
2013.9
2014.3
2014.9
2015.3
2015.9
2016.3
20
Premium
Benefit
investment
Buy bonds
at issue date
GIR matches bond yield
at issue date
Benefit
investment
Buy bonds
at premium payment
GIR matches bond yield
in accumulation period
21
Investment performance
Death Benefit
Maturity Benefit
Premium
Maturity Benefit
premium
Death Benefit
High yield
Sum total
350
Other
300
Foreign security
250
200
32.8%
Domestic
stocks
23.9%
150
Domestic
bonds
100
50
0
2011
2015
future
23
B/S
Liability
Net asset
Negative interest rate continues
Asset
Liability
Net asset
Company
Amount
2015/10
Daiichi
\ 283 billion
2016/1
Nippon
$ 1.5 billion
2016/4
Nippon
\ 100 billion
2016/6
Sumitomo
\ 100 billion
24
20
15
Required
Capital
10
5
0
2015.3
2016.3
5. Wrap-up
Corporate Pension
Life Insurance
Low Interest Rate
Consequences
Measures
Fund Deficit
Cash Balance Plan
Shift from DB to DC
26
Questions
22 November 2016
Comments
27