Life insurers have slightly increased both their share of the market in managing corporate defined-benefit pensions in pooled accounts and the amounts under management — despite declines in the business overall.
At the close of the financial year on 31 March 2016 the life cos’ pooled accounts (called co-mingled accounts in North America) held 14,788 billion yen of assets managed on behalf of 9,551 company DB schemes with 2.57 million members. In addition they were still managing 1,461bn yen for 49 so-called Employee Pension Funds (EPFs), a type of DB scheme which is being being slowly retired.
At the same time the their giant trust bank competitors had stewardship in pooled accounts of 42,676bn yen belonging to 2,776 DB schemes 5.29 million members and 22,746bn yen for 207 EPFs.
The source of the numbers is the Life Insurance Association of Japan.
The 8.52% drop in the overall level of pooled business is less than the 11.54% decline over the same 12 months in the amount held in discretionary accounts at fund management firms under mandates issued by corporate pension funds (see archive 20 June 2016 DB pensions managers hold asset allocations in year of turmoil).
Each of the several declines reflected in the numbers below has separate as well as connected causes.
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The drop in member numbers to 10.49 million from 11.45mn 12 months earlier reflects he decline in the size of Japan’s workforce as well as the dissolution of the weaker EPFs.
The 5.4% fall in assets is the outcome of the difficult conditions in all investment markets during the year which saw the Nikkei 225 stock index closing 13.6% lower than 12 months before and the Japanese currency strengthening against the US dollar by 6%, thereby undermining the value of overseas investments when translated back into yen.
The 0.9% decline in the number of D-B pension funds is most probably the result of corporate restructurings, such as that at Hitachi, which have seen the retirement schemes of numerous subsidiaries being consolidated into each other.
As already reported (see Return on pooled pensions accounts at life cos goes below 2% archive 19 may 2016), the investment performance of pooled funds declined in the year ending 31 March 2016 according to actuarial consultants Rating and Investment Information.
A breakdown showing the amount managed by each life co and trust banks will appear here within the next few days. Note that those numbers will be all book value.
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