Japan's Government Pension Investment Fund, Tokyo, 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 largest pension fund.
Yasuhiro Yonezawa, who sat on the panel hand-picked by Prime Minister Shinzo Abe that recommended a strategy and governance revamp at the ¥128.6 trillion ($1.25 trillion) GPIF, will join the committee, the health ministry said. Mr. Yonezawa, a professor at Waseda University's Graduate School of Finance, is expected to be named chairman, 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 health ministry appoints the members of the committee, which monitors the implementation of GPIF's policies and advises the president.
The appointments suggest the ministry is heeding the directives of Mr. Ito's group amid mounting pressure on GPIF to cut reliance on domestic bonds as pension payouts swell and Mr. Abe and the Bank of Japan seek to spur price gains. GPIF has already implemented several of the panel's recommendations, including preparing 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.
Mr. Yonezawa sits on a 10-member ministry committee that last month set GPIF's new return target of 1.7% plus the rate of wage growth and said the fund no longer needs a domestic bond focus.