Norinchukin Value Investments and Okasan Securities enter alliance

Norinchukin Value Investments (NVIC), an investment management and advisory company within the Norinchukin Bank Group, and Okasan Securities, the core securities company of the Okasan Securities Group, have concluded a business tie-up agreement regarding the provision of the company-type defined contribution (DC) plan “Owners Class”.

Background

Against the backdrop of growing awareness of long-term asset formation, the number of companies and members participating in company-type defined contribution (DC) plans has been increasing steadily over the past 10 years. However, out of approximately 2.5 million eligible companies, only about 47,000 companies have joined (approximately 2% penetration rate), with significantly lower penetration rates in SMEs compared to large companies.

NVIC and Okasan Securities are concerned about the “asymmetry” where only 6.9% of the approximately 65% (by employee composition ratio) of SMEs across Japan have adopted this plan. They believe that company-type DC plans, which are an effective means of asset formation for the general public, should be made widely available to SMEs. This initiative is also considered beneficial for addressing challenges facing Japan in its pursuit of becoming a wealth management nation, from the perspective of investing in human capital (SDGs: redress the inequality in financial services, ESG: human capital investment).

Owners Class: Solving the Problems of Company-Type DC Plans

With this understanding, NVIC and Okasan Securities released the company-type DC plan “Owners Class” (OC) in January 2023. It is recognized that company-type DC plans currently offered mainly to large companies do not always have clear concepts or selection processes for their product lineups, making it difficult for employees without investment experience to choose their own investment products. For employers, the burden of providing investment education and other employee support after implementation can lead to low participation rates.

To address these issues, OC is designed to be suitable for SMEs where even one employee can participate. It is also characterized by its carefully selected investment products that are highly compatible with long-term investment, focusing on the perspective of the ultimate beneficiary. It also offers a comprehensive range of investment education content, aiming to reduce the burden on employers and introduce a new type of company-type DC plan that is widely accessible across Japan.

This business tie-up aims to strengthen the operational management structure by enhancing collaboration between the operating management institution and the representative principal, delivering OC to a wider audience of SMEs in Japan, including affiliated organizations related to agriculture, forestry, and fisheries. It also aims to provide comprehensive support to both employers and employees.

Synergistic Effects of the Business Tie-up

NVIC has set a goal since its establishment in 2014 to “enrich Japan through investment” and has consistently provided investors with opportunities for long-term, carefully selected investments. Company-type DC plans are a “long-term, monthly investment infrastructure for pension asset management,” making them highly compatible with long-term, carefully selected investments. Through this business tie-up related to OC operations, it is expected that opportunities to raise awareness of long-term, carefully selected investments among individual customers who have not been connected with NVIC will expand.

Okasan Securities anticipates increased access to SMEs through OC, expanding opportunities to provide financial services tailored to various corporate needs to a wider range of companies, including contributing to the financial well-being of their employees.

Initiatives and Considerations Following the Business Tie-up

NVIC and Okasan Securities will implement the following initiatives to make OC available to as many SMEs as possible:

• Enhancement of Investment Products (continuous review of lineups, improvement of fund monitoring, information disclosure, etc.)
• Enhancement of Investment Education (improvement of content quality, UX improvement, investment seminars for employer support, etc.)
• Enhancement of Administrative IT Infrastructure (improvement of user-friendliness for employers, strengthening of customer support systems, etc.)
• Enhancement of Organizational Management Structure (personnel augmentation, establishment of joint ventures, etc., continuous review for strengthening operational management structure)

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