Huge Japan pension fund sees worst loss since financial crisis: official

Tokyo - Japan's mammoth public pension fund has suffered its biggest annual loss since the global financial crisis, an official said Friday, risking criticism of its move to a stocks-focused strategy.

The news comes as Prime Minister Shinzo Abe fends off accusations that his administration tried to delay the official release of the fund's results until after parliamentary elections next week.

An official at the health ministry, which oversees the Government Pension Investment Fund (GPIF), the world's biggest, confirmed it is on track to report a whopping 5.0 trillion yen (S$65 billion) shortfall for the fiscal year that ended in March.

The official, who asked not to be named, said the figure was mentioned at a closed-door meeting on Thursday.

"But we can't comment officially until after the GPIF announces its performance on July 29," the official said.

In previous years, the fund's results have been released in early July rather than later in the month.

The fund's previous loss record was an eye-watering 9.3 trillion yen in the year that ended in March 2009, as world financial markets plunged after Lehman Brothers' bankruptcy in September 2008.

The latest loss is partly tied to a tumble in equity markets last summer sparked by fears over China's economy and its shock yuan devaluation.

Japan's $1.37 trillion pension fund, which towers over its nearest competitor, Norway's pension plan, has nearly doubled the amount of equities in its bond-heavy portfolio to generate higher returns.

The move is aimed at financing the needs of Japan's soaring number of retirees who depend on payouts from the fund.

In 2014, the GPIF announced it would start a move to double its stock holdings from 24 per cent to 50 per cent.

The conservative fund had long kept the majority of its cash in super-safe and super-low return Japanese government bonds, generating anaemic returns.

In an interview with AFP this week, its chief Norihiro Takahashi acknowledged that the shock of Britain's vote to leave the European Union and a subsequent jump in the yen - bad news for exporters - would hit its performance.

But he said he will stay the course on the stocks-focused investment strategy, believing prices will soon settle.

The decision to release the figures at the end of this month has sparked claims by the opposition Democratic Party that the government is trying to hide the huge loss.

Abe has repeatedly disputed those claims, and the fund itself also rejected the accusations, saying instead that it needed to finish a once-in-a-decade review of its portfolio before publishing the numbers.

Japan's parliamentary elections are seen as a referendum on Abe's faltering plan to boost Japan's economy, although his premiership will not likely be contested.

Half of the 242 seats in Japan's upper house are up for grabs in the July 10 vote.