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Sony Shifts Pension Fund Management

February 27, 1998

TOKYO (AP) _ In a move signaling corporate Japan’s growing impatience with low returns on its investments, Sony Corp. has withdrawn pension money managed by Japanese life insurers and re-invested it with other financial companies _ many of which are foreign, a company spokesman said Friday.

Sony’s decision comes as many Japanese companies face ballooning pension liabilities yet have seen investment returns decline because of record low interest rates in Japan and a depressed stock market.

``We made our decision based on performance results,″ said Sony spokesman Tatsuya Inada. ``Many foreign firms have produced good returns,″ he added.

Four of the five trust banks and about half of the investment advisors chosen by Sony are foreign affiliates of major American and European financial companies.

In 1996, insurers had 40 percent of Sony’s 200 billion yen ($1.59 billion) pension business. Sony cut their share to 22 percent last year and then pulled out the rest this month.

Sony is not alone. A number of brand name Japanese manufacturers have sought out foreign financial advisors to help manage their retirement funds, including Honda Motor Co. and Mitsubishi Electric Corp.

Until recently, red tape and tradition kept almost all of corporate Japan’s estimated 200 trillion yen ($1.59 trillion) in retirement savings locked up with a handful of Japanese life insurers and trust banks who invested mostly in domestic bonds and stocks.

But regulatory reform and declining loyalty to long-time business associates has opened the door to foreign-owned specialist investment advisors such as Goldman Sachs Asset Management Japan Ltd. and Morgan Stanley Asset and Investment Trust Management Co.

The Japanese government has also opened up public pension coffers to these and other foreign companies in order to boost returns as Japan’s population ages and payouts to retirees swell.

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