Japan Pension Puts Governance Overhaul on Hold, For Now


A governance overhaul at the world’s largest pension fund was put on hold this week.

Officials at Japan’s Government Pension Investment Fund (GPIF) had been planning a major governance overhaul, including the creation of a new board to oversee the fund’s investments.

But that proposal and others have been put on the backburner, as Prime Minister Shinzo Abe approved a bill that will make governance changes on a much smaller scale.

More from the Wall Street Journal:

Minister of health, labor and welfare Yasuhisa Shiozaki, whose ministry has purview over the fund, has advocated installing a governing board that would oversee GPIF’s investments and ensure independence from political interference. But his idea was at odds with the overhaul process envisioned by others in the Abe administration. They believed a Shiozaki-style plan would be difficult to push through parliament in its current session, which ends in June, and they wanted to pursue as many changes as possible without a major new law.

Chilly relations between Mr. Shiozaki and the GPIF’s new chief investment officer, Hiromichi Mizuno, have also hindered the Abe government’s ability to build consensus.

On Tuesday, Mr. Abe’s cabinet effectively settled the dispute for now by approving a more modest bill without the Shiozaki proposals. The bill allows the fund to keep its headquarters in Tokyo, overturning a previous measure requiring a move, and gives legal imprimatur to the position of chief investment officer. Mr. Mizuno, a former private-equity executive in London, took the post in January. The smaller bill now goes to parliament for final passage.

Welfare Minister Shiozaki said he would continue to push for larger governance changes.

The GPIF manages $1.1 trillion in pension assets.


Photo by Ville Miettinen via Flickr CC License

Japan Pension Isn’t Hedging Against Stronger Yen; Investment Committee Member Calls Strategy “Unbelievable”


A member of the investment committee of the world’s largest pension fund expressed shock this week upon learning that the fund wasn’t hedging against a stronger yen.

Japan’s Government Pension Investment Fund (GPIF) overhauled its investment strategy in 2014, but hedging against the yen isn’t part of its plans.

From ai-cio.com:

Japan’s $1.1 trillion pension fund is refusing to hedge against a stronger yen despite the risks this poses to its growing pool of overseas assets.

The Government Pension Investment Fund (GPIF)—the world’s biggest pension fund—overhauled its strategy last year, buying into Prime Minister Shinzo Abe’s economic plan to boost inflation and weaken the yen. A weaker domestic currency would aid foreign holdings as well as some Japanese equities, asset classes to which the GPIF is increasing exposure.

However, Junko Shimizu, a professor at Gakushuin University and a member of the GPIF’s investment committee, told Bloomberg it was “unbelievable” that the pension had not moved to hedge the risk of the yen strengthening relative to other currencies. “My personal opinion is that they should look to hedge,” she added.

Shinichirou Mori, director of the planning department at the GPIF, said the pension did not make decisions “based on currency forecasts. We wouldn’t hedge based on a forecast.”

The GPIF manages $1.1 trillion in assets.


Photo by Ville Miettinen via FLickr CC License