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New access to savings, insurance and retirement

Savings
Japan Post is the world's largest savings bank, holding roughly 330 trillion yen total - more than half of the nation's gross domestic product - in individual savings and life insurance.  Privatization of the postal system in October 2007 will move more than 200 trillion yen from government-sponsored and government-guaranteed savings programs into quasi-private accounts. 

Savings in Japan Post have already dropped from 259 trillion yen in 1999 to 203 trillion yen as of January 2006, as investors move their funds to vehicles other than Japanese government bonds.

This gradual outflow of funds and the anticipated postal privatization have attracted many asset managers who are eager to service the world's second largest source of personal financial assets valued at $11.6 trillion (compared to $34.5 trillion in the United States).  Although second in personal financial assets, the Japanese have a higher savings rate at 13.5% compared to the 7.6% in the United States.

Insurance
Banks in Japan have been allowed to sell life insurance products since 2002 and will be able to engage in fully liberalized over-the-counter sales of insurance products by the end of 2007.  JPMorgan Chase & Co. predicts the market for variable annuities will reach $350 billion in sales by 2010, up from $70.8 billion last year.  The Hartford Financial Services Group has grown its asset level in Japan nearly two fold since last year, currently holding $26 billion in annuity accounts.

Retirement
Defined contribution pension plans were introduced only in 2001, so the short history of these and other asset classes leaves significant room for growth.  Japan's aging population, increased life expectancy and continuing pension reforms are expected to feed demand for retirement products.  The elderly population in Japan is estimated to reach 28.7% by 2025, up from about 19.5% in 2004.

Fidelity, one of the largest mutual funds providers in Japan, hopes to grab a large portion of the retirement savings market as outside fund managers gain access to savings assets under the control of the Japan Post as it becomes privatized.