Profit from managing accumulated pension reserves totaled ¥9.185 trillion in fiscal 2009 in what would be the first profitable asset management for a single fiscal year in three years, the health ministry said Wednesday.
The profit is the highest since fiscal 2001, when the government began managing pension reserves with full-fledged investments in financial markets.
It is a sharp reversal from fiscal 2008, which logged a worst-ever loss of ¥9.67 trillion due to global financial market turbulence in the wake of the Lehman Brothers collapse in September 2008. A moderate recovery in stock and other financial markets helped the government recover the loss in the fiscal year to last March 31.
The Government Pension Investment Fund, affiliated with the welfare ministry to consign pension fund management to trust banks and other financial institutions, is expected to announce the official figures soon.
Because pension reserves are managed on a long-term basis, a single year's results won't change the amount of pension receipt, but profitable management improves Japan's pension financing condition.
According to the Health, Labor and Welfare Ministry, about ¥122.5 trillion in pension reserves — premium income from employee pensions and national pensions for independent enterprises and others minus pension payment costs — was invested in financial markets as of the end of 2009, 69 percent of which went into domestic bonds.
Among other investment tools, 11 percent was invested in domestic stocks, 10 percent in foreign stocks and 8 percent in foreign bonds.
As for the government's risk tolerance with regard to pension management, Internal Affairs and Communications Minister Kazuhiro Haraguchi has called for more aggressive investment in emerging countries following the massive investment loss in fiscal 2008. Meanwhile, welfare minister Akira Nagatsuma has talked about the importance of secure asset management.
The two ministries have set up a joint committee to study how pension reserves should be managed.