As the world's biggest pension manager moves closer to putting more money in risky assets, the ruling Liberal Democratic Party's deputy policy chief says the fund needs to change its governance first.

Japan should submit a bill in the next Diet session to overhaul the structure of the ¥126.6 trillion ($1.2 trillion) Government Pension Investment Fund, Yasuhisa Shiozaki said in a speech at Bloomberg's offices in Tokyo on Tuesday. With the fund working on a separate investment-strategy review, discussion is needed on whether it's right to alter asset allocations before the law change, he said.

"We have to fix GPIF's governance structure in the extraordinary session and then rework its portfolio," said Shiozaki. "Governance reform is paramount and it's important to get it done before the weightings get changed this fall."