Four financial firms from the Mitsubishi group and five from the Sumitomo group said they were mulling entry into the "401(K)" market, which has become Japanese shorthand for portable, defined-contribution programmes.

At the same time, Nomura Securities and the Industrial Bank of Japan broadened the scope of a partnership announced a month ago, offering participation to six major commercial banks, IBJ said. The Nikkan Kogyo newspaper reported the project, known as Japan Investor Solution and Technology, would be expanded to include about 100 domestic and foreign institutions.

The announcements were followed by a pledge from prime minister Keizo Obuchi to introduce plans for a pension system modeled after the highly popular U.S. 401(K) programme by the end of thecurrent fiscal year on March 31.

Obuchi told parliament that his administration, working with the labour and welfare ministries, would endeavour to address the problem of a creaking pension system that by some estimates is 60 trillion yen underfunded on the corporate side alone.

"We will do our best to introduce (a 401(K)-like programme) by the end of the fiscal year," Obuchi told legislators in response to questioning.

Analysts welcomed Obuchi's comments saying that until now politicians were reluctant to discuss the gigantic pension timebomb out of fear it could hurt their re-election prospects.

"Before, politicians were scared to death to talk about the pension problem," said John Neuffer, political analyst at Mitsui Marine and Fire Research Institute. "Now, they're finally trying to get their arms around it."

Defined-contribution pensions, usually under the popular 401(K) programme, are already de rigueur in the United States, and have been credited, in part, for the dazzling US bullmarket.

Under 401(K) plans, employees "contribute" a portion of their pre-tax salary to an investment of their choice, often mutual funds. Employers pick up the administrative costs and sometimes make matching contributions to encourage retirement planning.

Unlike corporate pension funds, they can be moved from one employer to the next without penalty. That encourages mobility in the workforce, which many economists say Japan badly needs.

Friday's alignment of 401(K) forces effectively divides the nation's pension market into two huge captive corporate client bases, said Satoshi Shimamoto, economist at Standard & Poor's MMS. If the projects are concluded as indicated, the main banks of more than three fourths of Japan's major industrial groupings would be represented in the two partnerships.

The Mitsubishi and Sumitomo grouping, which will include Bank of Tokyo-Mitsubishi and Sumitomo Bank, as well as affiliated insurers, will likely get business from such huge companies as Kirin Brewery, Asahi Glassand NEC Corp, all of which use one of the banks as a primary lender.

Meanwhile, Nomura and IBJ would have inroads into Fuji HeavyIndustries, Tosoh Corp and Chisso Corp, as well as other companies that use IBJ as their creditor. The Nomura-IBJ venture will also have access to Dai-Ichi Kangyo, Fuyo, Sanwa, and Tokai group companies if the banks at the centers of those industrial groupings join the joint venture.