Moves on pension obligations could spur corporate investment

The Financial Services Authority is looking to revise the accounting treatment of impairment losses from pension benefit obligations (PBO) and deferred tax assets, according to an article in the Nikkei. The FSA hopes to have the new requirements in place by the financial year ending 31 March 2020.

PBO have been the subject of much less focus in Japan than elsewhere but this is the second time in just a few days that they have made the news. An earlier report noted that listed companies’ obligations shrank in the financial year ended 31 March for the first time in eight years.

As long-term interest rates stabilized and businesses adjusted retirement policies in hopes of lightening the load, aggregate PBO at 3,672 companies stood at 92.62 trillion yen at 31 March 2017 down 1% on the year, data from annual securities reports shows.

Nippon Telegraph and Telephone and Hitachi each recorded declines of around 170 billion yen, while Panasonic saw a nearly 120 billion yen reduction.

Honda Motor, benefited from raising its retirement age as did NGK Insulators’ where the move accounted for around 1.8 billion yen of a 95 billion yen decline.

“Swelling pension obligations are one reason why Japanese companies have been hoarding money, so a reduced burden will serve as an opportunity for them to take such steps as investing or returning money to shareholders,” Mikiharu Noma, an associate professor at Hitotsubashi University, told the Nikkei.

© 2017 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012



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