Nippon Life to Trim Corporate Pension Guaranteed Returns
Tokyo, April 5 (Jiji Press)--Nippon Life Insurance Co. will lower the guaranteed rate of return for existing defined-benefit corporate pension contracts in April 2023, the first decrease in 21 years, sources said Tuesday.
The rate will drop to 0.50 pct per year from the current 1.25 pct after the insurer found it difficult to maintain the rate amid prolonged superlow interest rates.
The move is likely to make it necessary for many client companies to review their fund management methods and increase premiums in order to maintain the levels of pension benefits promised to their employees.
Nippon Life has already filed with the Financial Services Agency for the reduction and is seen making an announcement soon.
Under defined-benefit corporate pension plans, companies promise their employees that fixed amounts of pensions will be paid in the future. The companies are responsible for pension management.
[Copyright The Jiji Press, Ltd.]