April 24, 2011 / 4:05 AM / 9 years ago

Japan GPIF to withdraw $78 bln from assets-Nikkei

TOKYO, April 24 (Reuters) - Japan’s public pension fund is planning to withdraw about 6.4 trillion yen ($78 billion) from its assets in this financial year to cover a shortfall in pension payouts, the Nikkei business daily reported on Sunday.

The Government Pension Investment Fund (GPIF) holds assets of about $1.4 trillion, larger than both the Canadian and Indian economies, and is a major force in the Japanese government bonds (JGB) market, where it parks two-thirds of its assets.

The GPIF is likely to raise cash by selling JGBs and other assets in its portfolio as pension contributions and tax income continue to fall short of pension payouts which are growing as Japan’s population ages, the newspaper said.

For the financial year that ended in March, the GPIF withdrew about 6 trillion-7 trillion yen to cover the shortfall, the Nikkei said.

This financial year, the fund plans to secure about 4.7 trillion yen for the purpose by not reinvesting money redeemed from JGBs coming to maturity, and raise another 2 trillion yen by selling stocks and bonds, the Nikkei said.

The GPIF has asked trust banks and others for advice about how to lessen the market impact of its asset sales, including the possibility that the fund might secure 2 trillion yen by bank lending to finance part of the payout shortfall, the Nikkei said. ($1 = 81.845 Japanese yen) (Reporting by Taiga Uranaka; Editing by Daniel Magnowski)

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