What is fund-type defined benefits pension plan in SAP PY-JP - Japan?

SAP Term: fund-type defined benefits pension plan

• Component: PY-JP

• Component Name: Japan

• Description: A type of defined benefits corporate pension plan, in which a fund is responsible for managing the plan. The fund signs a contract with external institutions, such as trustee companies or life insurance companies, and these external institutions manage the pension assets and issue the benefits when appropriate.

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• Key Concepts: 
  A fund-type defined benefits pension plan is a type of retirement plan offered by employers in Japan. It is a defined benefit plan, meaning that the employer guarantees a certain level of benefits to the employee upon retirement. The employer contributes to the fund, which is then invested in various financial instruments such as stocks, bonds, and mutual funds. The employee does not contribute to the fund and does not have any control over how it is invested. 
  
  How to use it: 
  Employers in Japan can offer their employees a fund-type defined benefits pension plan as part of their retirement package. The employer will contribute to the fund on behalf of the employee and will be responsible for investing it in various financial instruments. The employee will receive a guaranteed level of benefits upon retirement, regardless of how the fund performs. 
  
  Tips & Tricks: 
  It is important for employers to understand the risks associated with investing in a fund-type defined benefits pension plan. The employer should ensure that they are investing in a diversified portfolio of financial instruments that will provide a steady stream of income for the employee upon retirement. 
  
  Related Information: 
  The Japanese government has set up regulations for fund-type defined benefits pension plans, including rules on how much employers can contribute and how the funds must be invested. Employers should familiarize themselves with these regulations before offering this type of retirement plan to their employees.