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Benefits February 13, 2006
Japan's Welfare Ministry Rejects Pension Cut Request
February 13, 2006 (PLANSPONSOR.com) - Japan's
Ministry of Health, Labor, and Welfare has rejected Nippon
Telegraph and Telephone Corporation's (NTT) request to cut
the defined benefit pension plan payments of
retirees.
Reported by Rebecca Moore
The Jiji Press reports that the Ministry turned down the request on the grounds that NTT’s business has not deteriorated remarkably. NTT has reported profits each year since fiscal year 2002 ended in March of 2003.
In April 2004, NTT reduced accrued pension payments for around 110,000 current employees by linking the assumed yield for pension asset investment to 10-year Japanese government bond yields. The company’s proposal for cutting the assumed investment yield for around 140,000 retirees from the present 4.5 – 7% to the levels for current employees gained agreement in December 2004 from about 90% of those already receiving payments, according to the Jiji Press.
Japanese companies must receive approval from the Ministry to change the design of their pension plans since the plans are eligible for tax breaks. This is the first time the Ministry has denied a company’s request to reduce benefits.