Pension Seminar Defined Contribution (DC)
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Defined Contribution (DC) Pension Seminar Intermediate Course May 2022 Information provided here is for informational purposes only for making investment decisions and does not intend to solicit investment. While Sompo Japan DC Securities Inc. has prepared this document based on data which were deemed to be reliable, Sompo Japan DC Securities Inc. does not guarantee its integrity or accuracy. Furthermore, past performance results do not guarantee future performance. These slides have been planned and prepared by Sompo Japan DC Securities Inc. for the purpose of using in your company’s DC pension plan education seminar. Copyrights belong to Sompo Japan DC Securities Inc. Please do not release, rent or provide these slides outside of your company. . Copyright Sompo Japan DC Securities Inc
DC Plan The purpose of a DC plan is to “prepare money for post-work life”. 65 ・Benefit amount depends on investment results. ・The amount will be kept invested until benefit payments are completed. ・In principle, early withdrawal from the DC plan and early withdrawal of your assets are not allowed. Copyright Sompo Japan DC Securities Inc 2
Main Amendments to the DC Law in 2022 Enforcement Amended items Outline The upper age limit to claim (1) Expansion of claim period April 2022 retirement benefits will be raised for retirement benefits to age 75. ①For In principle, participation will be (2) Raising corporate- allowed until age 70. May 2022 participant type DC plan *Participant eligibility age differs by company. eligibility age Participation will be allowed until ②For iDeCo age 65. (3) Relaxation of requirements Improvement of early withdrawals for early lump-sum payments (early lump-sum payments) under May 2022 when a foreign national returns DC plans for foreign national to home country employees Rollover of assets in corporate- May 2022 (4) Expansion of portability type DC plan to Pension Fund Association upon retirement Oct. (5) Relaxation of requirements Elimination of DC plan document 2022(Schdul for iDeCo participation of requirements to prescribe e) corporate-type DC participants simultaneous participation in iDeCo Copyright Sompo Japan DC Securities Inc 3
Outline 1. Market Environment and Investment Results 2. Reviewing Investments 3. Procedures & Deadlines Copyright Sompo Japan DC Securities Inc 4
Price movements of major assets over the past decade Record date: end of February 2022 Copyright Sompo Japan DC Securities Inc 6
Risk/Return of Investment Trusts <Risk/Return by asset class> Pursuit of a higher return is accompanied by higher risk. If the risk is minimized, a higher return cannot be expected. *In addition to the above, there are investment trusts which invest in asset classes other than equities and bonds (real estate investment trusts (REIT), etc.). Copyright Sompo Japan DC Securities Inc 7
Stock Price Index (Past 10 years from March-end 2012 to March-end 2022) TOPIX (JP) S&P500 (USA) FTSE100 (U.K) DAX30 (DE) 400 350 321.7 300 250 227.8 200 207.5 150 130.3 100 50 0 '12/3 '14/3 '16/3 '18/3 '20/3 '22/3 The above chart shows movements of stock price indices until the end of March, 2022, using the price at the end of March 2012 as 100 This information is provided as an informational and referential purposes only and is not intended as 8 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc
Price Fluctuations of Investment Products(Japanese Equities) DIAM Japanese Equity Index Fund Sumitomo Mitsui Value Equity Pension Fund Fidelity Japan Growth Fund 220 190 160 130 100 70 '17/08 '18/02 '18/08 '19/02 '19/08 '20/02 '20/08 '21/02 '21/08 '22/2 The above chart shows price fluctuations until the end of Mar. 2022, using the price at the end of Aug. 2017 as 100. This information is provided as an informational and referential purposes only and is not intended as 9 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc As of End of March, 2022
Price Fluctuations of Investment Products(Foreign Equities) Index International Equity Asahi Nvest Global Value 220 190 160 130 100 70 '17/08 '18/02 '18/08 '19/02 '19/08 '20/02 '20/08 '21/02 '21/08 '22/2 As of End of March, 2022 The above chart shows price fluctuations until the end of Mar. 2022, using the price at the end of Aug. 2017 as 100. This information is provided as an informational and referential purposes only and is not intended as 10 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc
Foreign Exchange (Past 10 years from March-end 2012 to March-end 2022) USD Euro Yen 160 Weaker 140 Yen 136.70 120 109.8 122.39 100 82.19 80 Stronger 60 '12/3 '14/3 '16/3 '18/3 '20/3 '22/3 Yen The above chart shows movements of foreign exchange rates from the end of March 2012 to the end of March 2022. This information is provided as an informational and referential purposes only and is not intended as 11 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc
Long-term Interest Rate (Past 10 years from March-end 2012 to March-end 2022) JP U.S.A Germany 3.5% 3.0% 2.5% 2.210% 2.338% 2.0% 1.5% 1.790% 1.0% 0.548% 0.5% 0.990% 0.0% 0.220% -0.5% -1.0% '12/3 '14/3 '16/3 '18/3 '20/3 '22/3 The above chart shows movements of long-term interest rates from the end of March 2012 to the end of March 2022. This information is provided as an informational and referential purposes only and is not intended as 12 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc
Price Fluctuations of Investment Products(Foreign Bonds) Index International Fixed Income 220 190 160 130 100 70 '17/8 '18/2 '18/8 '19/2 '19/8 '20/2 '20/8 '21/2 '21/8 '22/2 The above chart shows price fluctuations until the end of Mar. 2022, using the price at the end of Aug. 2017 as 100. This information is provided as an informational and referential purposes only and is not intended as 13 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc As of End of March, 2022
Price Fluctuations of Investment Products(J-REIT, Foreign REIT) MHAM J-REIT Index Nomura J-REIT Nomura World REIT 220 190 160 130 100 70 '17/8 '18/2 '18/8 '19/2 '19/8 '20/2 '20/8 '21/2 '21/8 '22/2 The above chart shows price fluctuations until the end of Mar. 2022, using the price at the end of Aug. 2017 as 100. This information is provided as an informational and referential purposes only and is not intended as 14 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc As of End of March, 2022
Price Fluctuations of Investment Products(Balanced) DC Index Balance80 DC Index Balance60 DC Index Balance40 DC Index Balance20 220 190 160 130 100 70 '17/8 '18/2 '18/8 '19/2 '19/8 '20/2 '20/8 '21/2 '21/8 The above chart shows price fluctuations until the end of Mar. 2022, using the price at the end of Aug. 2017 as 100. This information is provided as an informational and referential purposes only and is not intended as As of End of March, 2022 15 a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc
Changes of Interest Rates in Principal Guaranteed Products (Past 10 Years) DC Guaranteed Principal plus Seven Bank DC Deposit 3 Year Fixed Accident Insurance 0.180% 0.170% 0.160% 0.140% 0.120% 0.091% 0.100% 0.080% 0.060% 0.040% 0.020% 0.011% 0.010% 0.000% '12/3 '13/3 '14/3 '15/3 '16/3 '17/3 '18/3 '19/3 '20/3 '21/3 '22/3 The above chart shows the changes of interest rates from March-end, 2012 to March-end, 2022. Copyright Sompo Japan DC Securities Inc 16
Investing ¥10,000/month Assumption: Invest ¥10,000 every month in each product at month-end price Last 10 years Since plan implementation (cumulative contributions: ¥1,200,000) (cumulative contributions : ¥560,000) Period: Apr. 2011 – Mar. 2022 Period: Aug. 2017 – Mar. 2022 DC Guaranteed Principal plus Accident… 120.0 56.0 Seven Bank DC Deposit 3 Year Fixed 120.3 56.0 DC Index Balance80 189.3 69.4 DC Index Balance60 170.8 65.9 DC Index Balance40 154.2 62.5 DC Index Balance20 138.0 59.0 DIAM JP Equity Index 187.6 67.2 SumitomoMitsui Value 173.9 65.8 Fidelity JP Growth 194.8 67.4 Index International Equity 266.0 88.3 Asahi Nvest Global Value 212.3 78.5 Index International Fixed Income 141.3 60.5 MHAM J-REIT Index 173.0 65.5 Nomura J-REIT 189.2 67.1 Nomura World REIT 209.3 80.4 This information is provided as an informational and referential purposes only and is not intended as a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc 17
Ref. Investment Performance by Product Period ending March, 2022 Copyright Sompo Japan DC Securities Inc 18
Ref. Investment Performance by Product Period ending March, 2022 Copyright Sompo Japan DC Securities Inc 19
AnswerNet Product Lineup Product Lineup ・Investment Product Lineup ・Performance Sheet ・Market Commentary Click on the product name to access the detailed information Copyright Sompo Japan DC Securities Inc 20
AnswerNet Investment trusts ・Investment Product Guide ・Data Sheet ・Monthly Returns ・Prospectus ・Fund reports, etc. 21,453 -169 21,622 Copyright Sompo Japan DC Securities Inc 21
AnswerNet Investment trusts 【Data Sheet】 (Only in Japanese) Comparing the performance of funds and their benchmarks Copyright Sompo Japan DC Securities Inc 22
2.Reviewing Investments . Copyright Sompo Japan DC Securities Inc
Investing through DC Plan Make investments based on the cycle below: Determine investment strategy (asset allocation) Changing contribution Planning Making instructions allocation/Switching to allocate your contributions among the products Start Reviewing investing Monthly contributions Rebalancing Reallocation Checking current status AnswerNet/AnswerCenter “Personal Financial Statement” mailed every July Copyright Sompo Japan DC Securities Inc 24
Reviewing Investments Check your investment performance and asset allocation status even after you start investing. <Notice of Temporary Change in Operating Hours at AnswerCenter> Weekdays 16:00-18:00 Weekends/Holidays Closed Issued annually in July Copyright Sompo Japan DC Securities Inc 25
Items to Check Current asset allocation status 【Asset Allocation Worksheet】 【AnswerNet】 Initial asset allocation Current asset allocation Compare The asset allocation status may have changed due to the price fluctuation of each asset. Copyright Sompo Japan DC Securities Inc 26
Change of Asset Allocation Due to Market Conditions Generally, the asset allocation status changes due to price fluctuations of equities. * Illustrative image Price JP Equities fluctuations JP Bonds Foreign Equities Foreign Bonds Asset Percentage Percentage of equities of equities balance larger smaller Bonds Bonds Equities 50 50 Bonds Equities Equities This information is provided as an informational and referential purposes only and is not intended as a solicitation for investment. Past performance is no guarantee of future results. Copyright Sompo Japan DC Securities Inc 27
Points When Reviewing Investments (1)Check the current asset allocation status. (2)Check if there has been any change in your investment strategy itself. *Pie charts represent illustrative image of asset value (%) (1) (2) Copyright Sompo Japan DC Securities Inc 28
Reviewing Investments (1) Rebalancing Rebalancing means adjusting your asset allocation back to its original state based on your initial investment strategy. * Pie charts represent illustrative image of asset value (%) Bonds Equities Initial Allocation Rise in stock prices A:50 B:50% Decline in stock prices →% in total asset value increased % →% in total asset value decreased → Higher Risk → Lower Risk A:40% B:40% B:60% A:60% Rebalancing has the effect of adjusting changes in the risk derived from changes in asset allocation. Copyright Sompo Japan DC Securities Inc 29
Reviewing Investments (2) Reallocation Reallocation means changing your asset allocation by taking into consideration the changes in your investment strategy resulting from age, etc. 20’s 30’s 40’s 50’s 60’s e.g.) Asset allocation may be changed due to the following reasons: • Aging (shorter time horizon to invest) • Life changes • (marriage, birth of child, home purchase, etc.) • Experience in investing • Market conditions Returns (gains) and risk tolerance should be reviewed. Copyright Sompo Japan DC Securities Inc 30
3.Procedures & Deadlines . Copyright Sompo Japan DC Securities Inc
Two Ways to Change Products Target is different between the two procedures. If you wish to change asset allocation and product(s), you need to take both procedures. 1. Asset allocation change 2. Switching Future Currently held Target contributions products Partial redemption Fee N/A charge (Only one product) Day before Deadline monthly contribution date Each business day Realization Upon selling of gain/loss Copyright Sompo Japan DC Securities Inc 32
Contact Information <Notice of Temporary Change in Operating Hours at AnswerCenter> Weekdays 16:00-18:00 Weekends/Holidays Closed 3. Tsumitate Navi (Smartphone app) *Only in Japanese QR code for the AnswerNet of Sompo Japan DC Securities Copyright Sompo Japan DC Securities Inc 33
AnswerNet Login Step DC Securities Go “Notice of Opening an Account” ID・Password Click to log in Enter Reissue password * If you forgot or lost your ID, please contact the AnswerCenter. If you forgot or lost only password, please click “Reissue password” on the AnswerNet main page. A new password will be issued. Copyright Sompo Japan DC Securities Inc 34
Confirming ID on Account Statement 0123456789 Mailed every July Copyright Sompo Japan DC Securities Inc 35
AnswerNet - Main Page - 【Menu bar】 【When you are lost】 Click here when you need to know how to use the website. Copyright Sompo Japan DC Securities Inc 36
Changing Contribution Instructions Contribution Instructions Change investment products to be purchased with future contributions and their allocations. Deadline falls on the day before the next contribution date. Copyright Sompo Japan DC Securities Inc 37
Changing Contribution Instructions 2. Set asset allocations for investment products you desire to purchase by 1%. They need to be totaled to 1. Confirm current 100% at all times. asset allocation. 3. Click [Confirm] button below when finished entering. ↓ Copyright Sompo Japan DC Securities Inc 38
Switching Sell currently held products Switching and purchase other products with the sales proceeds. As for the number of days required for switching (number of days from selling to purchasing), please see here. Copyright Sompo Japan DC Securities Inc 39
Switching Switching Accepted on every business day Step1. Selecting a product to sell Step2. Determining the number of units to sell or the amount in yen ※The selling amount and the type of sale differ depending on the product. Step3. Selecting a product to buy Copyright Sompo Japan DC Securities Inc 40
Switching Select a product(s) to purchase with the sales proceeds. Purchase You can select multiple products to purchase at one time. In the “Share” column, enter the percentage by 1% increments with the total amount representing 100%. Ex.) For 1 product, enter 100 Ex.) For 2 products, enter 50,50, etc. Copyright Sompo Japan DC Securities Inc 41
Switching View History: Confirm transaction details Date selling price determined Date purchasing price determined 取引内容を確認をして 実行ボタンを押します Submit Copyright Sompo Japan DC Securities Inc 42
Application for Participant Contributions Application for Participant Contributions ・New application ・Amount change ・Suspension of Contribution Copyright Sompo Japan DC Securities Inc 43
Merits of Voluntary Employee Contributions The full amount of participant contributions is subject to income deduction, so tax burden is reduced. 【Taxation merit related to taxable income and participant contributions】 Reduced tax amount=(Total tax rate of income tax and residential tax) x (annual amount of participant contributions) Reduced tax amount Total tax rate of (annual) Taxable income (annual) income tax and Participant Contribution Amount residential tax (in case of 10k yen/month) 1950k yen or less 15% 18k yen More than 1950k yen – 3300k yen or less 20% 24k yen More than 3300k yen – 6950k yen or less 30% 36k yen More than 6950k yen – 9000k yen or less 33% 39k yen More than 9000k yen – 18000k yen or less 43% 51k yen More than 18000k yen – 40000k yen or less 50% 60k yen More than 40000k yen 55% 66k yen ※The total rate of income tax and residential tax as of Jan 2022. The special income tax for reconstruction is not considered. 44 ※ Taxable income = Salary income – Amount of employment income exemption – Other income exemptions Copyright Sompo Japan ※ Fractions DC Securities less than 1,000 yenIncare rounded down.
Image of Using Tsumitate Navi (Only in Japanese) ・“Risk tolerance level” of each participant can be assessed by a robo-advisor. ・Based on the recommendation of investment products which suit your risk tolerance level, you can execute and complete the procedures to change products. STEP2 STEP1 STEP3 Assessment・ Confirmation Recommendation Execution Participants can confirm asset balance, By using a robo-advisor, participants can get Based on assessment results, participants can monthly contributions, approximate an assessment of asset allocation and take procedures to change investment cumulative contributions, etc. investment products suitable for their needs. products, etc. ※ Screen images above are for illustrative purposes only and are subject to change. Copyright Sompo Japan DC Securities Inc 45
Downloading and Registration of Tsumitate Navi (Only in Japanese) Have these three ready! ・AnswerNet Login ID 10-digit “Participant Code” App Store is a trademark of Apple Inc. iOS is the name of the operating system of Apple Inc. iOS is a ・AnswerNet Password trademark of Cisco Systems Inc. and is used under license. Android, Google Play and Google Play logo are trademarks of Google LLC. A temporary password needs to be changed. Click here to download the app. ・Email address Please set up to receive messages from the domain @tsumi-navi.sjdc.co.jp. Once you register, you don't need to enter the above information for a certain period of time from the next login! Copyright Sompo Japan DC Securities Inc 46
Thank you ! Copyright Sompo Japan DC Securities Inc 47
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