Utilizing His Experience to Launch Hagukumi Corporate Pension
Better Place Co., Ltd. specializes in introducing corporate pension and retirement benefit systems.
The company’s founder and CEO, Shinji Morimoto, established Hagukumi Corporate Pension to support asset formation for employees of small and medium-sized enterprises (SMEs). Recognizing the limitations of public pensions in ensuring financial security, Morimoto sought to provide a corporate pension solution tailored to SMEs.
Why Are Corporate Pensions Crucial for SMEs?
In this interview, Shinji Morimoto shares the inspiration behind his journey, insights into corporate pension structures, and practical advice for asset formation.
The Catalyst for Entrepreneurship: Financial Independence
Okubo: What inspired you to start your own business?
Morimoto: The turning point came when my younger brother filed for bankruptcy at the age of 25. At the time, my parents were running a liquor store, but they were forced to close, and my brother, as the guarantor, bore the financial burden. I was a salaried employee then but felt powerless to help. That experience made me question whether I wanted to remain an employee or live independently.
Okubo: My parents also ran a business, so I understand the challenges. It’s incredibly tough to sustain a business.
Morimoto: Exactly. That experience pushed me to pursue a life where I could stand on my own.
Okubo: How did you take the first steps toward entrepreneurship?
Morimoto: I’ve started two businesses. The first was inspired by my time at Scandia Life Insurance. I encountered Mr. Sawakami, then president of Sawakami Investment Trust, who introduced me to the concept of “financial independence.” He explained that even salaried workers could achieve financial independence through strategic asset growth.
Okubo: Meeting Mr. Sawakami must have been transformative.
Morimoto: Absolutely. His down-to-earth lifestyle despite his success fascinated me. Inspired, I learned asset management under his guidance and eventually launched my first company—a self-reliant asset management firm.
Okubo: How did your first business fare?
Morimoto: It was challenging to secure funding. About two years in, the company was transferred, leaving me penniless.
Okubo: That must have been tough. What did you do next?
Morimoto: I considered returning to corporate life but instead worked as a consultant in the medical industry. That role allowed me to utilize my asset management knowledge and entrepreneurial experience. Looking back, it was a pivotal phase that laid the groundwork for my current venture.
Understanding Corporate Pensions
Okubo: Could you explain corporate pensions and their significance?
Morimoto: Corporate pensions are private pensions that complement public pensions. Think of it as a three-tiered structure:
- National Pension (1st tier): The base level of financial security.
- Employee Pension (2nd tier): Mandatory for company employees.
- Corporate Pension (3rd tier): Provided by companies to further enhance financial stability.
There are two main types:
- Defined Contribution Plans: Employees manage their contributions, benefiting from tax advantages.
- Defined Benefit Plans: Companies guarantee a specific retirement payout.
Corporate pensions offer tax-exempt savings, reduced investment barriers, and significant advantages for asset growth, making them particularly beneficial in countries like the U.S. However, in Japan, SME adoption of corporate pensions is still minimal.
Bringing Digital Transformation to SMEs
Okubo: Many SMEs might find the implementation of corporate pensions daunting. How does Better Place address this?
Morimoto: Traditional providers like banks and insurers often neglect smaller companies. Many SMEs with fewer than 50 employees face challenges such as lack of education, support, or clear processes.
That’s where Hagukumi Corporate Pension stands out. By leveraging digital transformation, we’ve simplified the process from consultation to implementation. Our system, Hug One, digitizes 95% of the procedures, including decision-making, application processes, and client education.
Okubo: Digital transformation must have been crucial, especially during COVID-19.
Morimoto: Indeed. The pandemic accelerated the government’s push for paperless operations. This shift allowed us to position ourselves as leaders in a relatively untapped market.
With Hug One, clients can track every step of the process in real time, reducing errors and complaints. Even the remaining paperwork required by the Health Bureau will soon be digitized, streamlining the experience further.
Why SMEs Choose Hagukumi Corporate Pension
Okubo: How does Hagukumi Corporate Pension compare to similar systems?
Morimoto: One common alternative is the Small and Medium Enterprise Retirement Benefit Mutual Aid System (Chutaikyo). However, it has limitations:
- Contributions may be forfeited if employees leave within one or two years.
- The expected interest rate is only 1%, which is insufficient during inflationary periods.
In contrast, Hagukumi Corporate Pension offers a higher expected yield of approximately 2%. Additionally, it provides flexibility, such as allowing employees to access funds during childcare or elder care leave.
Okubo: How affordable is the system for companies?
Morimoto: The average monthly cost is around 1,000 yen per person, covering digital platform usage and administrative fees. Employees typically contribute over 22,000 yen per month, benefiting from significant tax and insurance savings.
Reducing Employee Turnover and Enhancing Engagement
Okubo: How has Hagukumi Corporate Pension impacted companies?
Morimoto: One childcare company with a 19% turnover rate implemented our system. By integrating corporate pensions and encouraging voluntary savings, they reduced turnover to 15%.
This system not only boosts financial security but also fosters employee engagement. Many managers recommend us to their peers, demonstrating the value we bring.
Advice for Entrepreneurs
Okubo: Do you have any final advice for entrepreneurs?
Morimoto: Avoid the “red ocean” of oversaturated markets. Focus on your company’s strengths, analyze competitors, and identify opportunities in untapped niches. Strategic differentiation is key to success.
Disclaimer: This article is an English translation of the original content published on the website sogyotecho.jp, which is the parent company of the Founders Guide website. The translation aims to provide information to English-speaking readers while maintaining the essence of the original article. Please note that any discrepancies or inaccuracies in the translation are unintentional. For the most accurate and up-to-date information, kindly refer to the original article in Japanese on sogyotecho.jp
