Japan’s $1.1 trillion Government Pension Investment Fund, Tokyo, moved a step closer to installing a board of directors to replace the current system in which sole power lies with the president.
A health ministry working group discussing how to revamp the pension fund’s leadership structure met for the last time in Tokyo on Wednesday, and agreed the pension fund should introduce a board to make decisions on investments. A CEO position should be created, said the panel, which hasn’t decided yet whether the CEO should be on the board. The group’s proposal will be submitted to another committee within the ministry for approval, with no timing given for when changes will be made.
“GPIF is moving in a good direction,” said Kazuyuki Terao, chief investment officer of Allianz Global Investors Japan Co. “It’s positive news.”
Takahiro Mitani, GPIF’s current president who plans to retire from the pension fund in March, came from a central banking, rather than investment, background.
The overhaul of GPIF’s governance is the next step in a reshaping of the pension fund recommended by a group hand-picked by Prime Minister Shinzo Abe in a report in November 2013. The pension fund carried out the biggest change in its investment strategy in October when it announced it would more than double its equity allocation and cut domestic bonds, also based on the recommendations of the panel.
Takatoshi Ito, a professor at the National Graduate Institute for Policy Studies who headed that committee, also sat on the governance working group. Mr. Ito and Health Minister Yasuhisa Shiozaki have been advocates of taking power for investment decisions away from a single person.