Defined-benefit corporate pensions enjoyed their second successive year of high investment returns in the 12 months to 31 March 2014, according to the latest annual rankings by plan assets by Nenkin Joho. The fortnightly newsletter’s numbers show many schemes enjoying yields in double figures and some surpassing 20%.
Nomura Research Institute led the field in growth terms with a return of 35.87% on 81,123 million yen of holdings. NRI has 4,000+ employees and includes advice to asset managers in its suite of products. By contrast Tokio Marine Nichido Life Insurance, with over 12,000 workers, saw the value of its portfolio drop 2.2% to 181,32mn yen.
In an era of continuing deflation, and before the current run-up in equities on the back of government buying, the overall results speak to the deployment of excellent asset management skills. And they are just what sponsoring companies need now that demographics mean most schemes’ annual benefits payments will exceed will their yearly contributions income for as far as the eye can see.
Nenkin Joho is published by Rating & Investment, the actuarial consulting subsidiary of the Nikkei newspaper. The weakness of its annual rankings is that it has to rely on funds being prepared to fill out and return its questionnaire.
This year responses were received from 320 of the 15,000+ ‘fund-’ and ‘covenant-type’ defined-benefit schemes then existence and from 117 of 527 of the ‘Employee Pension Funds’ (EPFs).
Fortunately some funds are repeat responders and so comparisons are possible.
Unfortunately Hitachi Ltd seems not to have responded to the latest round of data gathering leading to the omission of what has since 2004 been by far the country’s biggest company retirement scheme. The number one slot had previously been taken by the National Credit Union [Zenkoku Shinyo Kumiai] the multi-company plan for bank employees which several institutions later left.
At 31 March 2013 Hitachi Ltd had assets of 812,924 million yen – well ahead of current number one Toyota Motor Corp’s 645,660mn yen — and a very rapid growth rate thanks to good investment returns and the schemes of many former subsidiaries’ being brought under its wing as a consequence of the sprawling group’s corporate restructuring.
Conversely the multi-company National Electronic Machinery Industry fund responded this year for the first time since 2011.
Just beyond the top 20 shown in the table are Yamazaki Baking which returned 15.91% — following 16.22% the year before — on assets of 113,630mn yen, and Pfizer Japan with 15.68% — after 2013’s 16.22% — on assets of 111,488mn yen.
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