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Sharp to drastically revise corporate pension system
[March 06, 2014]

Sharp to drastically revise corporate pension system

(Japan Economic Newswire Via Acquire Media NewsEdge) OSAKA, March 6 -- (Kyodo) _ Struggling electronics maker Sharp Corp. is considering drastically revising its corporate pension system to prevent a further deterioration in its financial standing, sources close to the matter said Thursday.

The Osaka-based company is studying the introduction of a so-called 401k-style pension system, under which the value of benefits fluctuates depending on investment performance, they said.

Under the current scheme, the company makes up for any shortage of pension benefits deriving from low interest rates and slumping stock prices.

Sharp is facing a shortfall of around 120 billion yen in its pension reserves. Due to a change in corporate accounting standards, companies are now obliged to book pension reserve shortfalls as debt.

After conducting public stock offerings and other measures, Sharp has managed to improve its capital-to-asset ratio to around 13 percent. But the ratio is expected to deteriorate to about 8 percent after booking the debt, the sources said.

The company will introduce the new pension scheme as early as April next year if it obtains consent from its labor union, the sources said.

Among other electronics companies, Panasonic Corp. and Sony Corp. have introduced 401k-style pension schemes.

(c) 2014 Kyodo News International, Inc.

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