BT, Merc Mut parents jump into Japanese bed
The Principal Financial Group, owner of BT Funds Management, and ING, parent company to Mercantile Mutual have formed a joint venture in Japan to take advantage of a burgeoning superannuation and pension market.
The Principal Financial Group, owner of BT Funds Management, and ING, parent company to Mercantile Mutual have formed a joint venture in Japan to take advantage of a burgeoning superannuation and pension market.
The new partnership is banking on anticipated legislative changes later this year which will lead to the creation of defined contribution pension schemes.
ING has already been working within the Japanese market promoting life insurance, funds management and banking products through its own distribution channels.
The channels will be used by Principal to offer retirement products and technology enhancements, particularly to small and medium sized businesses when the company begins operations in Tokyo in the first quarter of 2001.
Principal president and chief executive officer J. Barry Griswell says the scope of the market is substantial due to the strong savings culture in Japan. Japanese households save US$13 trillion each year.
“The potential for this segment of the market is very large where small and medium sized businesses comprise over 180,000 businesses, employing over 16 million people and with an asset accumulation growth estimated at US$25 to 30 billion of contributions per annum,” Griswell says.
Japanese pension scheme company DLIBJ Asset Management senior relationship manager Toshikazu Nishimura concurs, saying the potential worth of the pension market is enormous given the savings culture.
"Most of the trillions in savings are tied up in low yielding accounts but the younger generation are interested in moving into other investment vehicles. If only one per cent of Japanese savings moved in this way, the impact would still be huge," Nishimura says.
Currently pension schemes are outside a regulatory scheme says Nishimura with unfunded pension liabilities over the US$550 billion mark.
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Jason Spits
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