Covid-19 set to hit Japan DC pensions especially hard

Apr 5, 2020

The country's defined contribution plans could weather market storms better if they had a wider choice of alternative assets and a stronger focus on rebalancing, say industry experts.

Covid-19 set to hit Japan DC pensions especially hard

Market turbulence caused by the coronavirus pandemic looks set to hit Japanese defined contribution (DC) pension plans particularly hard, as they are prohibited from investing in most alternative assets, notably private markets.

A wider choice of investments would help reduce risk and boost returns, while schemes should also consider rebalancing their portfolios as the recent volatility will likely have sparked wide divergence from their target allocations, suggest industry experts.

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