Don't forget to advise your employees to transfer their corporate DC assets upon their retirement!

◆The total amount of assets left in corporate DC is approximately 260 billion yen!

According to a summary by the National Pension Fund Association, the pension assets of approximately 1.12 million people have been left unmanaged in the defined contribution corporate pension plan (hereafter, "corporate DC"). The number of participants has increased by 1.5 times since the end of fiscal year 2017, when public records were available, and the total amount was approximately 260 billion yen as of the end of the previous fiscal year.

◆Assets to be transferred after loss of company-type DC eligibility

If an employee retires before the age of 60 and loses eligibility for the company DC, there are two major options: (1) transfer assets to another company DC, or (2) transfer assets to iDeCo. You have two major options. If the transfer procedure is not completed within 6 months of the loss of eligibility, the assets will be automatically sold and converted into cash and transferred to the account of the National Pension Fund Association or a specific operation management institution. (so called automatic transfer).

◆Disadvantages of "automatic transfer

If automatic transfers are made, not only are fees charged to the National Pension Fund Association and the specified management institution, but also monthly management fees are charged, and it is not possible to give investment instructions for the assets or request benefits. In addition, the total period of participation will not be counted, and the start of receiving benefits may be delayed.

Corporate practitioners should remember to advise their employees about this corporate DC asset transfer, along with other retirement procedures, when they retire.

Reference

For those who are employed (or have changed jobs) or retired -- the iDeCo official website

https://www.ideco-koushiki.jp/retirement/

"Human Capital Management" in the spotlight

◆Human Capital Management, which is gaining momentum

The themes of "human capital" and "human capital management" have been gaining momentum in recent years, and on August 30 of this year, the Cabinet Secretariat released "Guidelines for Human Capital Visualization," which has been covered in a variety of media. This guideline provides guidelines for disclosure of human capital for listed companies, but even for non-listed companies, the content of the guideline cannot be ignored as a reference for the future direction of corporate management.

◆Human capital activity of companies is about 30-40%

The Ministry of Economy, Trade and Industry (METI) defines "human capital management" as a management approach that views human resources as capital and maximizes their value to enhance long-term corporate value.

According to a survey on the topic of human capital management conducted by Recruit Co., Ltd. of 10,459 people working for companies, the percentage of people who feel that their current workplace is the optimal department assignment and who feel that their job assignment is such that their knowledge, skills, and experience can be utilized is about 30%, the percentage of people who can verbalize their knowledge, skills, and experience related to their current job and those who understand the knowledge, skills, and experience needed to improve the level of their current job was about 40%.

These results show that the current state of companies is far cry from human capital management, which is about maximizing the value of human resources.

◆Watch out for future developments!

In August, the "Human Capital Management Consortium" was established with the participation of the Ministry of Economy, Trade and Industry (METI) and the Financial Services Agency (FSA) as observers to share advanced cases of human capital management practices, discuss cooperation among companies, and study effective disclosure of information. We will keep a close watch on future developments.

Ministry of Economy, Trade and Industry "Report of the Study Group on Improvement of Sustainable Corporate Value and Human Capital

https://www.meti.go.jp/policy/economy/jinteki_shihon/pdf/20200930_2e.pdf