Japanese pension fund to be restructured

Chikafumi Hodo and Takaya Yamaguchi Tokyo

THE JAPANESE Government Pension Investment Fund (GPIF) planned to sell ¥1.7 trillion (R162 billion) fewer assets to pay pensions in 2013/14 than it had sold this fiscal year, it said yesterday.

Takahiro Mitan, the chairman of the world’s biggest public pension fund with investments mostly held in Japanese government bonds, said in an interview that the fund, whose $1.2 trillion (R10.6 trillion) portfolio is bigger than the Mexican economy, would review its long-term investment target and portfolio allocation model around April.

The review should include a discussion of the investment strategy towards Japanese government bonds (JGBs), which formed two-thirds of GPIF’s portfolio, Mitani said, as yields on 10-year JGBs were languishing at around 0.8 percent.

Meanwhile, Mitani said, the fund planned to raise about ¥4.7 trillion for pension payouts for the financial year starting in April, down 26.6 percent from the planned sale of ¥6.4 trillion during the current year.

GPIF became a net asset seller for the first time in 2009/10, and investors in JGBs closely follow the fund’s sales.

The public fund cashed out about ¥2.54 trillion of domestic bonds and foreign bonds during 2011/12.

Mitani, a former Bank of Japan executive, also said that he did not think Japan’s equity market was overheating, despite a near 30 percent climb since mid-November last year, and that foreign investors’ perceptions of the Japanese market had improved since Prime Minister Shinzo Abe took power in December.

Last year, a Board of Audit report, requested by the upper house of the National Assembly, called for the public fund to consider reviewing its target and allocations. – Reuters