Nomura asset’s new Japan retirement help team is run by retirees
Among the risks that investors in the country face are demographic trends such as shrinking birthrates, an ageing population and longer expected lifespans
[TOKYO] Nomura Asset Management asked retired workers in its corporate group to form a team to help clients invest their pension funds, to survive in one of the world’s fastest ageing economies.
Eight of the nine-member newly created retirement solutions department are in their 60s and had previously retired, said the team’s boss, Koji Nakamura. At only 56, he’s the odd one out.
“Having employees who have actually experienced retirement allows us to better identify customer needs,” Nakamura said. “Our mission is to cultivate the mindset of managing funds while gradually drawing down assets.”
The Japanese government has been promoting tax-free accounts known as Nippon individual savings account (Nisa) to encourage people to invest rather than keep their money in savings, as longer lifespans pressure the nation’s ability to support its elderly population. The challenge of shifting more funds into investments can be seen though in surveys showing that risk-averse senior citizens will mostly keep their retirement payouts in bank deposits still offering near-zero interest rates.
Nomura AM’s department was established in April and began full operations in June, mainly holding seminars for customers from about 50 financial institutions including regional banks.
Japanese companies including financial firms tend to ask staff to step down when they turn 60, though workers have the legal right to stay employed for five more years.
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The team members do not introduce specific investment products to clients themselves. There are also no real numeric goals such as revenue, and they report directly to president Hiroyasu Koike.
Among the risks that investors in Japan face are demographic trends such as shrinking birthrates, an ageing population and longer expected lifespans. The last item is good news health-wise but indicates that the nation needs more funding to help elderly people in their twilight years.
Japan’s life expectancy was about 85 years as at the end of 2023, among the longest in the world, compared with around 82 two decades earlier, according to United Nations data.
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Regulators are trying to offer investors more choices to boost returns. Japan’s Financial Services Agency (FSA) has proposed the expansion of Nisa-eligible products as part of its annual pitches for tax reform steps next year. That’s short for Nippon individual savings account.
Still, caution about life after retirement remains high. Over 80 per cent of people in their 60s and 70s cited pensions as their primary source of retirement income, according to a 2023 survey by the FSA that suggested they would be willing to live on significantly less income than when they were employed.
Japan’s also bracing for mass retirement of workers who were born in the nation’s second, smaller baby boom from around 1971 to 1974. Many of their parents were born during the nation’s first baby boom after World War II ended in 1945.
“Until I was 59, I felt fine, exactly the same as I did throughout my career,” said Yuichi Kikuchi, who now works in the retirement solutions department after leaving Nomura Asset Management when he turned 60. “When I was faced with retirement, for better or worse, it meant that I had to make a decision. Even though I was working for an asset management company, I felt like I didn’t know what to do,” said Kikuchi, who is now 62.
Based on his own experience, he said, “by providing clear signposts and routes, people will be able to enjoy spending money even during the period that’s like coming down from the mountain and drawing down their assets”. BLOOMBERG
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