Japan overhauls its public pension fund, the worlds biggest

Written by Reuters | Tokyo | Updated: Apr 23 2014, 10:10am hrs
Japan overhauled the worlds biggest public pension fund on Tuesday, appointing new committee members, in a push toward Prime Minister Shinzo Abes goal of a more aggressive investment strategy.

The government announced a reshuffle of the investment committee of the $1.26-trillion Government Pension Investment Fund (GPIF), in line with Abes drive to have the fund make riskier investments and rely less on low-yielding government bonds.

The new committee will play a leading role when GPIF sets its new investment allocation targets over the coming months. Abe has promised GPIF reform as an element of his growth strategy, the third arrow in his policy, following aggressive monetary and fiscal stimulus.

Health minister Norihisa Tamura, who appoints the GPIF Investment Committee members, shrank the panel to eight members from 10 as part of the overhaul. Two members retained their seats and one former member was brought back on.

The interests of pension beneficiaries come first in pension fund management, Tamura told a news conference after the regular cabinet meeting.

The panel retains a balance of academics and economists, with one representative each from the main trade union federation whose pensions are at stake and the biggest business lobby.

But in a sign of Abes more aggressive strategy, three of the now eight members sat on the advisory panel that spearheaded a change in the funds strategy last year to achieve higher investment returns.

They are Sadayuki Horie, senior researcher at Nomura Research Institute; Isao Sugaya of the JTUC Research Institute for Advancement of Living Standards, a think tank of Japans top labour federation; and Yasuhiro Yonezawa, a professor of Waseda Universitys graduate school of finance.

The advisory panel was led by Tokyo University Professor Takatoshi Ito, who has been outspoken in calling for GPIF to undertake a more aggressive investment strategy.