Japanese corporate pensions return to positive territory
Stocks performed well, but bonds faltered
TOKYO -- Japanese corporate pensions generated positive yields for the first time in two years in fiscal 2016, thanks to higher share prices since autumn.
Major pensions yielded 3.5% on average, according to Rating and Investment Information, recovering from negative 0.97% the previous year. The figure exceeded the prevailing expected yield of 2%, likely lowering companies' pension burden.
R&I compiled data from around 100 corporate pensions, with assets totaling some 9 trillion yen. Actual values were used for April to February, along with March estimates based on asset allocations at each pension.
Returns on domestic and foreign equities were also positive last fiscal year. The Nikkei Stock Average rose 13%, while the Dow Jones Industrial Average climbed 17%. Better returns from higher share prices helped offset declining asset value from the yen's strength.
But yields were negative on bond holdings, with foreign bonds hit by American interest rate hikes and the stronger yen. Domestic bond prices also fell, putting a dent in their performance.
In a survey of about 120 companies by American advisory firm Willis Towers Watson, major pension yields rose to 3.5% from the previous year's negative 0.6% to mark the first positive reading in two years.