A Proposal to Allow DC Plan Participants to Withdraw or Borrow Against Plan Assets in Emergencies

In Japan there are tight restrictions on the early withdrawal of defined contribution pension plan assets. In this paper we propose a system to allow participants in such plans to withdraw or borrow against their plan assets in the event of a disaster such as the one that struck Japan on 11 March of this year (2011). The average value of the assets in the individual member accounts of Japanese company defined contribution pension plans as of March 2010 was roughly ¥1,250,000. In our view, this is a sufficiently large amount to help participants affected by a disaster to get back on their feet. The existing system should be changed as soon as possible to help tide plan members over their current difficulties