[New Publication] "Mitsubishi UFJ Total Reward Report May Issue" Published, Understanding the Current State of HR and Pensions

Mitsubishi UFJ Trust and Banking Corporation (President and CEO: Hiroshi Kubota) has published the "Mitsubishi UFJ Total Reward Report May Issue" on its website.

We deliver an excerpt from this monthly magazine to everyone.

Review of Retirement Benefit Plans in a Rising Interest Rate Environment

A rising interest rate environment impacts various aspects such as pension finance, corporate accounting, and plan design.

In pension finance, it can affect the management of contributions and reserves, and the treatment of surpluses, through the rise in the minimum assumed interest rate and the reduction of the maximum reserve amount.

From the perspective of corporate accounting, fluctuations in the discount rate not only affect the level of PBO but also ripple into P/L recognition through interest expense, service cost, and the expense treatment of actuarial gains and losses.

Given the changes in the interest rate environment, we believe it is beneficial to re-evaluate one's retirement benefit plan and organize and verify it from the perspectives of finance, accounting, and plan design.

<Transition of Minimum Assumed Interest Rate>

Source: Created by the author from Ministry of Finance data

Strategic HR for Realizing Management Strategy ~Strategic HR and Organizational Development~

Even if HR strategies are advanced through strategic HR, there is a challenge that the organization and on-site behavior do not change.

In response to this challenge, advanced companies are increasingly positioning "organizational development," which works to influence the organization's structure and behavior patterns, as an independent organization within the HR department or as an organization directly under management.

While HRBP (Human Resource Business Partner) connects management strategy and HR strategy, and CoE (Center of Excellence) designs HR systems and measures, organizational development is responsible for building the organizational capabilities to make them executable.

Organizational development is not about training or implementing one-off measures, but rather has the function of continuously intervening in dialogue, learning, decision-making processes, and the approach to change.

It is important to consider the introduction of organizational development, starting from clearly defining the expected roles and objectives.

<Relationship of Each Organization>

Source: Created by the author

Current Status and Future of Corporate Defined Contribution Pensions from Statistical Data

Corporate Defined Contribution (DC) pensions continue to expand their participant numbers, reaching approximately 8.62 million as of the end of March 2025, a scale comparable to Defined Benefit (DB) corporate pensions.

In terms of asset composition, the proportion of principal-guaranteed products such as deposits and insurance has decreased, and the shift of funds to investment trusts has progressed year by year, with the proportion of those investing only in principal-guaranteed products falling to 21%.

Regarding the content of continuous education, there are a considerable number of topics that delve into participants' lives, such as "life plans" and "public pensions/retirement life planning," functioning also as providers of financial and economic education.

<Transition of DB/DC Participant Numbers and Coverage Rate>

Source: DC: Defined Contribution Pension Management Organization Liaison Council "Defined Contribution Pension Statistics," DB: Trust Companies Association of Japan "Status of Entrusted Corporate Pensions (Defined Benefit Type)," Coverage Rate: Calculated by the author from Ministry of Health, Labour and Welfare data

Column: Oil Crisis

Read the full report here.

URL:

https://www.tr.mufg.jp/houjin/jutaku/nenkinjoho/pdf/mutb_202605.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=prtimes