April 2017

Japan stems rate of population decline, but growing pension burden looms

Japan’s population will fall nearly a third by 2065, with almost 40 per cent aged 65 or older and the working population labouring under a tougher pension burden, although the pace of population decline has slowed slightly, a government agency said yesterday. Solutions to Japan’s population slide have eluded policymakers for decades, putting finances under growing pressure as demand for pensions surges. In 2015, the government established a new Cabinet minister with the task of keeping the population from slipping below...

Ultralow rate driving Japan’s public pension fund out of JGBs

The Bank of Japan's zero interest rate policy is forcing Japan's Government Pension Investment Fund to take on more risk via an increased portfolio allocation to stocks, as near-zero yields have made Japanese government bonds nonviable as core holdings. The GPIF aims to secure returns equivalent to the rate of wage growth plus 1.7 percentage points in order to make good on payouts. The fund overhauled its base asset allocation policy in October 2014 amid the reflation push by the...