Japan’s pension system poses high risks of clients losing their money and the AIJ scandal may be just an example of what could follow, analysts and company leaders say.
The problem at AIJ Investment Advisors is more than a isolated incident, as it indicates serious problems in the system created deregulation reform which began in the 90’s.
When the authorities, pressed by a slowing economy made it easier for investment companies to manage corporate pensions, they did not make sure they also implemented a control system to properly punish fraud says Yasuyoshi Masuda, an economics professor at Tokyo University.
“There is a flaw in the whole system,” he says.
Masazumi Ando, a trucking company president who is responsible for 300 employees enrolled in a pension plan worth $120 million, money that after the AIJ scandal could be gone forever, reacts furiously. “This is nothing but a fraud. We are preparing to file lawsuits so that any cash that may be hidden overseas could be recovered”.
The scandal affects however many more small and middle-sized companies, where up to 880,000 employees risk to lose money.
“Many of them are small businesses. They could collapse in a domino effect,” says Hiroyuki Ozaki, a business professor at Tokyo University of Technology.