Mitani to remain head of Japan's trillion-dollar GPIF pension fund

TOKYO: Takahiro Mitani will remain head of Japan's trillion-dollar public pension fund, officials said on Saturday, as the government wrestles with how to govern the mammoth fund.

Health and Welfare Minister Yasuhisa Shiozaki is set to name Mitani, 66, to another term as chairman of the Government Pension Investment Fund, starting April 1, three government officials with direct knowledge of the matter told Reuters.

Global investors have been closely watching who would head GPIF, the world's biggest pension fund, when Mitani's term expired. Its 137 trillion yen ($1.13 trillion) in assets, bigger than Mexico's annual economic output, make it an enormous market presence and a bellwether for other big Japanese institutional investors.

It was not clear whether Mitani will be named to a five-year term or a shorter tenure, the sources said on condition of anonymity.

Mitani has presided over a sharp shift in the fund's management toward riskier and higher-yielding assets such as stocks and away from Japanese government bonds under a push from Prime Minister Shinzo Abe, who is trying to reflate the economy and whittle down the country's enormous debt.

GPIF press officials could not immediately be reached for comment.

Bureaucrats, politicians and labour unions cannot agree on even the most basic of changes to GPIF's governance.

Abe, leading a drive for higher returns on pension investments for the nation's growing ranks of elderly people, wants a nimble GPIF. He is pushing Japan's institutional investors and companies to take more risks with their enormous cash piles to spur economic activity and end nearly two decades of deflation.

But the welfare ministry, which oversees GPIF, is concerned about putting the retirement savings of 67 million people at risk.

Shiozaki has been pushing for governance reforms to professionalise and beef up the fund's management, but officials near Abe have baulked at Shiozaki's proposal to create a large board to oversee the fund. That has likely delayed attempts to improve oversight even as it moves into riskier assets, according to sources and draft legislation seen by Reuters.

Approaching the end of Mitani's term, the government considered various replacements, including asset-management specialists from the private sector, but decided - at least for the time being - to stick with the former Bank of Japan board member, the sources said.