TOKYO: Japan's state pension fund will invest 5.8 trillion yen (US$54.3 billion) of new money in financial markets in the fiscal year starting April 1, less than half the amount invested in the current year, with the bulk going into domestic bonds, according to plans unveiled yesterday.
The Ministry of Health, Labour and Welfare did not provide a breakdown of investment plans, but a senior official said the priority would be on domestic bonds after the rise in share prices over the past year made the fund overweight in equities.
The Government Pension Investment Fund's new investment money for the fiscal year will be less than half its planned investment of 12.1 trillion yen (US$113.1 billion) in the current year as a bigger part of the fund's income had to be used to underwrite government agency bonds.
With the balance between income from contributions and payouts to pensioners chronically in the red, the new funds come from redemption of past investments, which fell to a net 15.4 trillion yen (US$143.9 billion) in fiscal 2004-05 from 19.5 trillion yen (US$182.2 billion) a year earlier.
In addition, new investments were squeezed by the need for the fund to underwrite more government agency bonds under a stop-gap scheme to absorb the increased issuance of such debt to 41.3 trillion yen (US$386.0 billion) in fiscal 2004-05 from 30 trillion yen (US$280.4 billion).
The increased issuance, in turn, stems from a drastic cut in the government's Fiscal Investment and Loan Programme (FILP) under Prime Minister Junichiro Koizumi's reform policy, which meant the agencies could not simply roll over maturing borrowings from the postal saving system through FILP.
As of the end of December, the fund managed about 44 trillion yen (US$412.0 billion) of assets in financial markets. Of that total, 22.8 trillion yen (US$213.1 billion), or about 52 per cent of its total market investments, was in Japanese bonds. The fund's investment strategy follows a model portfolio designed by an advisory panel to the ministry.
(China Daily 03/23/2004 page12)
