GPIF Shakes Up Committee With Three Abe Panel Members
Japan’s
government pension fund overhauled its investment committee, adding
three members of a state panel that urged it to cut bonds, as the
balance of power shifts at the world’s biggest manager of retirement
savings.
Yasuhiro Yonezawa, who sat on the
group handpicked by Prime Minister Shinzo Abe that recommended a
strategy and governance revamp at Japan’s 128.6 trillion yen ($1.25
trillion) Government Pension Investment Fund, will join the committee,
the health ministry said. Yonezawa, 63, is expected to be named head,
according to media reports. Sadayuki Horie and Isao Sugaya were also
appointed, with only two of 10 previous members remaining and the
committee’s size reduced to eight.
“Several
stages are needed to change GPIF’s governance structure, and the first
is to change its investment committee members,” Takatoshi Ito, who
headed the advisory group, said in an interview on April 17. “Our panel
advised that the investment committee should hold more power, as the
fund currently has no board of directors.”
The
appointments suggest the ministry is heeding the directives of Ito’s
group amid mounting pressure on GPIF to cut reliance on domestic bonds
as pension payouts
swell and Abe and the Bank of Japan seeks to spur price gains. GPIF has
already implemented several of the panel’s recommendations, including
readying to diversify into areas such as infrastructure, adopting
benchmarks like the JPX-Nikkei Index 400 for domestic stocks and
preparing to hire in-house investment experts at market rates.
The
health ministry appoints the members of the committee, which monitors
the implementation of GPIF’s policies and advises the president.
Yonezawa,
a professor at Waseda University’s Graduate School of Finance, is also
on a 21-member advisory group helping the ministry of health conduct a
five-yearly review of public pensions due this year, which may lead to a
change in asset allocations. He sits on a 10-member ministry committee
that set GPIF’s new return target of 1.7 percent plus the rate of wage
growth last month and said the fund no longer needs a domestic-bond
focus.
“I’m convinced that he will work in
line with our panel’s report to enhance GPIF’s investment and strengthen
its risk management and governance,” said Masaaki Kanno, chief Japan
economist at JPMorgan Chase & Co., who was also a member of Ito’s
group.
Yonezawa is expected be named
chairman of the investment committee, according to reports by the Nikkei
newspaper and Kyodo News on April 19.
Horie
is a senior researcher at Nomura Research Institute Ltd. and previously
worked for Nomura Asset Management Co. Sugaya, 61, is managing director
at the Japan Trade Union Confederation, known as Rengo.
Two
women have been appointed: Junko Shimizu, a professor of international
finance at Gakushuin University in Tokyo, and Yoko Takeda, chief
economist at Mitsubishi Research Institute Inc. Also joining the group
is Setsuya Sato, a professor in the English communications department at
Toyo University who also served as a financial adviser to the World
Bank and public policy director at UBS AG.
The
remaining two are Hiromichi Oono, a board member at Ajinomoto Co. and
Kimikazu Noumi, president and chief executive officer at Innovation
Network Corporation of Japan.
Ito’s panel
recommended in November that legislation be enacted to give GPIF
independence from the health ministry, which has ultimate responsibility
for the fund. As a transitional measure until the law is passed,
multiple members of the investment committee should be hired full-time,
according to the panel. The health ministry’s statement made no mention
of full-time officials.
A system where
GPIF’s head has sole decision-making power and responsibility “may fail
to function adequately,” Ito’s panel said in its report in November.
Takahiro Mitani, the fund’s president, currently has sole authority.
GPIF
and the health ministry should “quickly and steadily” enact necessary
policies following the recommendations by Ito’s panel, according to a
cabinet decision on Dec. 24.
“The cabinet is the driver of change” for GPIF, Ito told Bloomberg News. “The cabinet is going to keep pushing.”...
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