Bank of Yokohama taps merit-based retirement payments.

TOKYO, May 26 Kyodo

The Bank of Yokohama will introduce in July a new method of calculating retirement allowances based on employee performance and difficulty levels of work, sources at the regional bank said Monday.

The bank follows in the footsteps of some of the larger banking groups with nationwide branch networks, including Sumitomo Mitsui Financial Group Inc. and UFJ Holdings Inc., in a shift from the long-standing seniority system in severance payments.

The move is the latest step for the Bank of Yokohama to switch fully to a merit-based pay system following its abolition of the seniority-based structure in regular wage payments last July.

The Bank of Yokohama will put a premium on such factors as specialty and difficulty levels of work under a system that decides the amount of retirement allowance according to cumulative points varied on the types of managerial positions an employee is assigned, the sources said.

They said the latest plan has entailed decisions to expand opportunities for its employees to apply for different jobs. The bank's in-house licensing system will be simplified to enable faster promotion to key positions such as branch or department chief.

The bank has also opted to use 401(k)-style pension plans in part of its corporate pension program in order to allow its employees to manage pension funds on their own account.

For the conventional portion of its corporate pension program, the Bank of Yokohama will link it to the yield of 10-year Japanese government bonds in an attempt to stave off investment losses, according to the sources.