Japan pension fund to sell about $108 bln of assets in 2012/13

Japan's public pension fund, the world's largest, plans to raise about $108 billion from the sale of assets, including Japanese government bonds, to generate cash for pension payouts this year.

The Government Pension Investment Fund (GPIF) has become a net seller of assets to raise cash for pension payouts in recent years after inflows from loans being paid back by public entities stopped.

The public pension fund, which is under pressure to raise returns to cope with a rapidly ageing population, is closely watched by markets as its $1.33 trillion portfolio is nearly as big as the economy of Spain.

For the 2012/13 financial year, which started this month, the fund plans to generate about 8.87 trillion yen ($108.12 billion) in cash for pension payouts, according to a document on the public fund's website.

The amount is similar to the planned amount in the previous financial year that ended in March. The actual cash sales for 2011/12 are expected to be released mid-year.

In the year to March 2011, the GPIF sold 4.77 trillion yen worth of assets, made up of 4.37 trillion yen in domestic bonds and 405 billion yen in foreign equities.

The GPIF invests reserves of national and corporate pension plans, allocating about two-thirds of its assets to Japanese government bonds (JGBs), where the yield on benchmark 10-year bonds languishes around 1 percent.

Its holding of foreign shares helped the fund generate a positive investment return in the October-December quarter of 0.58 percent, for an investment gain of 619 billion yen.

However, its rate of return in the nine months to December was minus 2.5 percent, losing 2.87 trillion yen ($35 billion).

The fund currently invests in four asset classes - domestic bonds, domestic stocks, foreign stocks and foreign bonds - and plans to invest in emerging market equities.

[Source: Reuters, Tokyo, 03Apr12]

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