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HOME  > Past issues  > 2012 February 29 - March 6  > Deregulation to causal factor in loss of pension funds by investment firm
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2012 February 29 - March 6 TOP3 [POLITICS]

Deregulation to causal factor in loss of pension funds by investment firm

March 4, 2012
Akahata editorial (excerpts)

AIJ Investment Advisory Co. had caused most of about 200 billion yen in smaller companies’ pension assets to disappear due to high risk speculation. The money invested was intended to bolster pension payments after retirement.

This investment advisory firm misled investors into believing it was generating good performances in order to earn enormous performance fees through an overseas investment fund.

The Securities and Exchange Surveillance Commission (SESC) should immediately investigate the flow of funds and locate any secret remaining funds to lessen losses to the pension fund.

Out of 84 companies which entrust their pension assets to AIJ’s care, 74 are pension funds involving 480,000 workers at small- and mid-sized corporations.

The Financial Services Agency says it will investigate all 263 investment managing companies like AIJ. However, the agency is just requesting them to submit written reports. In fact, only 15 firms were subject to inspections in FY 2010. The agency is not carrying out its supervisory responsibility in oversight of investment of pension assets.

In the 1990s, financial “structural reforms” deregulated the use of employees’ pension funds for investments under strong pressure from the financial community. The government removed restrictions on the use of pension funds in 1997 and completely removed a ban on discretionary investment management businesses in 1999.

The Japanese Communist Party has, from that time, called for a universal system to protect the employees’ right to receive pension, and has continued opposing the relaxation of regulations as it increasingly places pension assets at risk.

The government should be held responsible for having promoted deregulation to allow pension assets to be used for financial speculation at the business community’s beck and call without any concern for supervisory oversight.
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