politics

Japan's public pension fund may shift funds to stocks from bonds

37 Comments
By Chikafumi Hodo

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37 Comments
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This was once debated in the US congress initiated by Bill Clinton. It was very wise we never took this risky stock investment for US social security. As you know, in 2008, we went through a major global financial melt down. Many financial institutions went to bankruptcy and they are no longer in business.

1 ( +2 / -1 )

So we are seeing a shift of public monies going into private stock exchanges. Why would they do this? Because 1. They want to prop up the stock market 2. If the stock bubble bursts the government is off the hook for huge future pension payouts! Stock markets never have bubbles and never burst right? It's win/win for the government either way. Short term prop up for the market, if it goes long term, well then, they can pay future obligations. If it goes bust, they get to say "sorry, we can't pay you as it's gone in the bust". Meanwhile insiders will be loading up on stocks in which the pension money is to go into. If anyone knows which stocks these will be, please let us all know!

3 ( +3 / -0 )

Well, as they say, once the public is all in stocks, time to get out. Seems like they are last to the party.

0 ( +0 / -0 )

They are going to loose the money because they are heavy shark a lot smarter than those Japanese pension manager.

1 ( +1 / -0 )

@Joe

I agree that frontrunning will likely occur.

0 ( +0 / -0 )

Well say goodby to my pension money :(

6 ( +6 / -0 )

Potentially a good idea, but I would ask where the gov't would get its investment advice from. A lot of "Investment professionals" don't know what they're talking about, a la the "specialists" who handed over people's savings to Bernie Madoff with his vintage 1980s computer.

My adviser in Tokyo (who exposed me somewhat to Madoff) told me that gold and certain commodities are a "no-brainer," with nothing but upside. That was just before they lost nearly 40 percent of their value. The big winners with this fund could be the investment industry, which always collects its fees, regardless of how much of your money is loses.

1 ( +2 / -1 )

I suppose gambling with public funds is better than gambling with federal ones. If they lose it all they can just say "shoganai" and all will be forgiven. This is actually a pretty reckless move and could have serious economic repercussions if the market fails. Yet, the wankers make me manditorily pay into this slush fund.

6 ( +7 / -1 )

I might as well trust my own judgement and put my money into mutual funds and various other investments.

2 ( +2 / -0 )

I am one of very few who see too many faults in Abenomics. This is clearly one of them. With future Japan credit rating going down the hill, the cost of borrowing will go up to 8% or more.

This is just J. government is shifting a responsibility of pension fund to private sectors that can file bankruptcy any time. If they go bad, so is your hard earned pension to toilet. J government has no responsibility. If you think this is great, you are nothing but a sucker and a fool to hungry savvy global hawks. We will squeeze money from you guys..

2 ( +2 / -0 )

The smartest place to put your money is in your pocket.

2 ( +2 / -0 )

I can't put my money in my pocket, my company takes the pension fund out of my salary before I get it.

1 ( +2 / -1 )

my company takes the pension fund out of my salary

And doubles it for you.

-1 ( +1 / -2 )

Cleo, most of us could double it on our own with our own investments.

-3 ( +3 / -6 )

most of us could double it on our own with our own investments

Thanks for the laugh.

1 ( +4 / -3 )

most of us could double it on our own with our own investments

If it's so easy to double yer money, why would anyone complain about the measly amount that goes into the pension?

-1 ( +2 / -3 )

JeffLeeAug. 07, 2013 - 09:51AM JST

Potentially a good idea,

An horrendous idea. Throwing good money (people's lifetime savings in their pension funds) after bad money (shares in companies who are imprisoned to a declining dempographic and economic base, based on an out dated economic model of neo-mercantilism).

Today the Nikkei is nearly losing 5% and if wasn't for the BOJ announcing yesterday that it had bought up ETFs, would be a double digit decline over 2 days.

-1 ( +3 / -4 )

Today the Nikkei is nearly losing 5% and if wasn't for the BOJ announcing yesterday that it had bought up ETFs, would be a double digit decline over 2 days.

But still up over 10% for the year to date right? Fear-mongering is one thing, but in the case of pension funds prudent investing is of the utmost importance and with the government here throwing money at everything in an attempt to kick start the economy for the umpteenth time no one should be fooling around with the pension funds.

3 ( +3 / -0 )

" But still up over 10% for the year to date right? Fear-mongering is one thing, but in the case of pension funds prudent investing is of the utmost importance and with the government here throwing money at everything in an attempt to kick start the economy for the umpteenth time no one should be fooling around with the pension funds."

First of all, the present condition of both Nikkei and DOW/NASDAQ are a sugar-high of QEs. Even a whiff of "tapering" sent them plummeting. And they WILL come down again. In the past, bonds were considered safe, but since the currency inflationary practices have become all the rage, they are a risk.

Hard money is good money.

1 ( +2 / -1 )

I think Joe Budai hit the nail on the head.

-1 ( +0 / -1 )

Wasn't there recently an article on JT that this fund is run by 2 blokes and their dog in some dingy office in Nihonbashi or similar? Not sure i would want them taking big punts on the market. although leaving all the money in JGB's isn't goping to generate much of a return either and is only supporting the government's overspending.

0 ( +0 / -0 )

Great idea! You will have more losses than you have ever seen.

-2 ( +0 / -2 )

STOP STOP STOP STOP!!! There is a reason why most pension funds put their monies into Bonds, government paper, money market funds, etc..

They are less RISKY than playing the market!!!

78.8% of the assets in domestic bonds... surely you can get better returns by looking at more foreign bonds - bonds from Canada, Australia, the US, even some of the BRIC countries? Even some corporate bonds fall into AAA territory

Its not about making killer returns for pension funds, its about capital protection and if it can outpace inflation by a small margin then everyone is a winner!!

.... or the fact that so many people will come to rely on the pension is the problem... don't people save anything into a retirment fund on their own in Japan? Don't they have 401k's like in the states or RRSPs like in Canada????

0 ( +0 / -0 )

YubaruAug. 07, 2013 - 03:41PM JST

But still up over 10% for the year to date right?

Still nearly 300% down from the Nikkei December 29th, 1989, right?

When the Nikkei 225 Hit 38,957.00, right?

Fear-mongering?

-1 ( +3 / -4 )

Don't they have 401k's like in the states or RRSPs like in Canada????

No, they do not.

-2 ( +0 / -2 )

Interesting that they don' talk about fees/overhead related to this. Then again if you public pension fund is taken out of the bond market, what will happen to interest rates? Who will be buying bonds? If interest rates go up what will happen to government debt which is already at 250% of GDP? Sounds like one step into bankruptcy for Japan.

2 ( +2 / -0 )

@globalwatcher - how does one save for retirement in Japan? It can't all be from the Pension, that's insane

0 ( +0 / -0 )

@Dog

Still nearly 300% down from the Nikkei December 29th, 1989, right?

Down more than 100%? How does that work?

1 ( +3 / -2 )

malfupeteAug. 08, 2013 - 05:19AM JST

@globalwatcher - how does one save for retirement in Japan? It can't all be from the Pension, that's insane

It takes careful political awareness among citizens to talk about individual retirement programs besides national pension.

If someone wants individual retirement investments here in US, there are many tax deferred choices; IRA, Roth IRA, 401K, Corporate Pension, Insurance Annuity along with Social Security. We are encouraging at least 20% of income saved for retirement.

-1 ( +0 / -1 )

"Still nearly 300% down from the Nikkei December 29th, 1989, right?"

Your comparing today's level with the peak of an asset bubble a quarter of a century ago. Are you suggesting that Japan should aim to create another such bubble?

0 ( +1 / -1 )

Cleo, because wasting money, regardless of the amount, is wasting money. I'm glad you find the sum small, I don't when you add it up over the years. If the government could be trusted with it, I wouldn't mind but the issue is, they can't be trusted with it and they've proven that more than once with say, losing all those pension numbers a few years ago. I'd rather not pay pension here but since I have to, I do. Unlike many others.

Thanks for the laugh. Not sure why you're laughing. Perhaps you don't invest well?

-1 ( +1 / -2 )

tmarieAug. 08, 2013 - 08:24AM JST

I do not trust them, tmarie. I am glad I pulled my Japanese pension when I left. I have no regret.

0 ( +2 / -2 )

JeffLeeAug. 08, 2013 - 08:52AM JST

.

And I'm "distorting truth"? Where do I even begin to respond to that one?!?!

How is your pension doing lately? Good? You do not have to shift your anger to IMF and me.

That's the heart of the matter for you. You are supposed to contribute your financial obligations to Japanese pension fund under the law while Japanese government has NO obligation to you. Hope you realize what I have said, very important.

0 ( +1 / -1 )

Very good point Global!!

-1 ( +1 / -2 )

My money is all in rupees. The future of Mumbai is now. I never slept better. A pile of rupees under my pillow and heavenly dreams of Krishna every single night.

0 ( +0 / -0 )

@malfupete I believe you are correct. The problem with government bonds in Japan is they pay like .01 percent interest. So in effect every year the government keeps your saved money, locked safely away, in a government backed bond you are losing money through inflation. I am pretty sure they have indexed funds in Japan, like they do in every single other stock market on Earth. All the filthy rich people in the world have all or most of their money in a stock market in some location. The absurdity that government bonds are 100 percent safe and stock market = gambling only belies the ignorance of the person making such accusations. Also the point of putting the pension funds in to something like a stock market index fund would also shift the financial hit from massive amounts of retirees from the government to the stock market.... All government bonds are is little pieced of paper that state the government will try to repay you the amount due at the time its due.. See America and Greece for examples of how safe those investments really are...

-1 ( +0 / -1 )

In fact, that dispute has been existed for many decades. Both Japan and China refrained from exposing publicity and confrontation. However Ishihara inflamed with his pre war mentality " Japan that can say No ". Abe also has strong desire for fulfilling his imperial official grandpa unfinished business. It is for reviving nationalism of pure and clean Yamato clan. It is good for winning more seats and popularity too!

He wants Japan to flex more muscle as touch guy. China has waited for HK for 100 yrs. Why not they can wait for 1000 yrs for that issue? Due to demographic factor, It is doubtful Japanese race still exit after 10 decades. Problem has been solved without single shot.

0 ( +1 / -1 )

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