Asset formation trusts

Workers' Asset Formation Promotion Act provides for the mechanism of helping employees build up their assets. The system is designed to assist workers with savings, funds for old age, and homeownership.
Based on this system, trust banks handle asset formation trusts, asset formation pension trusts, asset formation pension trusts, asset formation housing trusts, asset formation housing trusts, asset formation payment trusts, and asset formation funds trusts.
Of these, asset formation pension trusts and asset formation housing trusts are tax-exempt up to a principal amount of JPY5.5 million and up to an aggregate of JPY5.5 million, if using both forms of trust. However, when payments are made for pensions or for purposes other than the acquisition of housing, the tax exempt status does not apply for interest payments previously paid on a tax exempt basis for the five years prior to the date of such payment. Furthermore, asset formation pension trusts are tax-exempt following retirement as well as during the period of employment.

Asset formation savings system

A certain amount that workers have had continually deducted from their salaries and deposited with trust banks are called asset formation trusts.
The trust objectives for asset formation trusts are unrestricted, and the interest income distributed is subject to a separate withholding tax of 20% (∗).

∗: For interest payments made between January 1, 2013 and December 31, 2037, an additional special reconstruction tax (0.315%) is withheld.

Asset formation pension trusts

These trusts were created to encourage workers to accumulate funds for their old age through their own efforts. Workers under the age of 55 have a fixed amount continuously deducted from their pay by their employers for at least five years. Such funds are accumulated at trust banks and other institutions and then the worker receives a fixed payment in the form of a pension beginning at least five years, and no longer than 20 years, after turning 60. These trusts are called asset formation pension trusts.

Asset formation housing trusts

These trusts were created to help workers accumulate funds to purchase housing. Workers under the age of 55 have a fixed amount continuously deducted from their pay by their employers for at least five years. Such funds are accumulated at trust banks and other institutions and provided to the householder as deposit for purchasing housing or for home extension or reconstruction. These trusts are called asset formation housing trusts.