A one-man think-tank
With 30 years experience in Japan’s financial system, and having worked for Barclays Trust and Credit Suisse, Yasuteru Aizawa is now a roving ambassador for Japanese pensions industry.
He established IPERI in the early 1990s to develop a research and consulting facility based around his own beliefs and utilising close relationships with key individuals in the Japanese pensions industry.
The institute carries out research in the international pensions market, especially in Europe and the US. Its aim is to bring the experience of other markets to bear on the development of a successful pensions initiative in Japan. It is also involved in advising on asset allocation and management trends.
In 2000, Aizawa travelled extensively in Europe, meeting with many of the key individuals driving the reform process. He has been impressed by the progress made in Europe towards internationally transportable pensions schemes.
He is a firm believer that Japan needs to gain a greater degree of sophistication in its pension system. In particular, he says there needs to be a more advanced approach to the management of pension assets.
Now that the Japanese politicians are showing a greater willingness to improve economic efficiency after 10 years of stagnation, Aizawa says that the management of human resources must be included in this: “Pension funds are too closed off in their management, and a review of their social responsibility is much needed.”
He suggests mass communication will improve the accountability and positive influence of pensions: “Pension funds can have a lot of power in terms of corporate governance issues and the work done by IPERI is aimed at moving towards this way of thinking.”
“It is time to take a good look at the Japanese market and we have to exchange information and learn from others’ experience. We are not behind the US and Europe, but mainly we tend to think about the pursuit of efficiency and we have to shift our focus. The big Japanese companies such as Toyota are moving this way, although they were reluctant at first.”
Aizawa echoes the views of his contemporaries in calling for the tax treatment of ‘401k type’ pensions to be addressed as a priority. “In companies, they are starting to revise their concept of the employee and this is the heart of the problem. The system has to be made attractive to the employee”. The education of employees must run hand in hand with this.
So do we have two markets, one for the older employee and one for the young? Aizawa thinks not, but accepts that some companies will think in this way: “But they have to take one concept. And for those who choose the DC scheme, they must prepare suitable funds for employees to choose. It is beholden on the medium and large corporates to produce products by themselves, but the small companies will rely on the investment managers and major insurers to produce suitable funds.”
The IPERI motto stresses balance in all things - showing there is a high level of philosophical thought going into what Aizawa-san is doing. He continually stresses the need to focus on what he calls “the economy of human beings”. Corporate pensions, he says, “have great potential to contribute towards this and we are trying to be a steady help for them in a practical way.”
In his corporate career, he pioneered the introduction of foreign practices to Japan. At Barclays Trust, he introduced the concept of ‘intelligent sales activities’ after intensive study of practices in the UK, Europe and the US.
He established and oversaw a system for effective pension marketing by BTB, by analysing the characteristics of the Japanese pension system in relation to its overseas counterparts. In three years after joining BTB, its pension business was among the biggest foreign trust bank providers in Japan.