June 28, 1993
TO: BOARD OF GOVERNORS NO. 58-93
INTERNATIONAL MEMBERS NO. 19-93
RE: JAPAN ANNOUNCES LIBERALIZATION OF FOREIGN MANAGEMENT OF
JAPANESE PENSION FUNDS
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As you may know, the Institute has been actively seeking liberalization
of the restrictions currently placed upon foreign investment advisers seeking
to manage the assets of Japanese pension funds. In October, 1992, Institute
representatives met in Tokyo with representatives of the Japanese government
and investment management industry to discuss these issues. Since then the
Institute has been working with U.S. Government representatives to obtain
liberalization of the Japanese investment management market.
We are pleased to inform you that, according to recent information from
the U.S. Treasury, the Japanese government will allow foreign investment
advisers to manage a greater portion of Japanese pension plan assets.
Currently, U.S. advisers may manage only post-1990 contributions to corporate
pension funds ("new" money), up to one-third of a plan's total assets. The
new policy, which was announced in connection with the ongoing Uruguay Round
GATT negotiations, eliminates the old money/new money distinction. A foreign
adviser will be able to manage up to one-third of a corporate pension plan's
assets. This share of the corporate pension market represents approximately
twelve percent of all Japanese pension plan assets. The new policy, which is
subject to change before it is finalized, is expected to be implemented by the
end of the year.
We will keep you informed of developments.
Catherine L. Heron
Vice President-Tax & Pension