JAPAN - Noboru Terada, the Japanese Government Pension Investment Fund's executive investment officer is unlikely to continue in his post following reforms to the world's biggest pension fund.
The GPIF, which is expected to grow to a massive JPY160trn (US$1.6trn) by 2008, will be reformed to form the Pension Reserve Fund Administration and Investment Agency from 1 April, 2006. Following these changes, the post of executive investment officer has been scrapped, effectively putting an end to Terada’s reign at the GPIF.
“When the GPIF was created there was only one change and that was the creation of my post,” said Terada. “I have two associates so there are three of us in the same position. These positions were created to provide professional people from investment [backgrounds]. But these posts do not exist any anymore, so professional advice will no longer be provided in the GPIF. If they stop hiring professional investment people, the quality will decline because the GPIF will have no proper investment professionals.”
Terada is widely known and respected in Japan as the man who steered the massive
GPIF in the right direction – the GPIF moved into the black in 2004, posting a return of JPY2.2trn (US$19bn) on its investments. The outspoken Terada is also known for trying to diversify the staid GPIF into asset classes such as hedge funds. Some speculate that this may have worked against him.
Terada was scathing about the government appointed board of trustees and heads of investment departments: “If we still have these people in this organisation after April, nothing will change. These people have no understanding of investment practice.”
When asked if he would continue, Terada said: “I haven’t been requested and I don’t think I would like to continue. I am 69 years old. My tenure was to be terminated last March, but the government asked me to stay on. I don’t have any expectations.”
Terada noted: “Our agenda should be to make the GPIF more professional. And for this, we have to recruit from the private sector.
“If the government continues to push their staff to the new organisation, nothing will change.”
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
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