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World's biggest pension fund increases pay for top exec by 64%

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(Bloomberg) — The head of the world’s largest investor of retirement savings just got a 64 percent pay rise.

Japan’s Government Pension Investment Fund will increase total annual compensation of its president to about 31 million yen ($260,000), including salary, bonuses and allowances, according to calculations by Shinichiro Mori, a director at the fund’s planning section. That compares with 18.9 million yen previously slated for the year ending March 31, Mori said by phone. The pay increase is effective this month, he said.

Boosting pay may help the pension fund hire more money managers from the private sector as it shifts more of its $1.1 trillion from bonds to riskier assets. Even after the increase, the GPIF’s top executive will be paid almost 40 percent less than his counterpart at the California Public Employees’ RetirementSystem, the largest U.S. public pension.

“Compared with global standards and given the responsibility as the top asset manager, the amount still isn’t that big,” said Tetsuya Sakabe, managing director at recruitment adviser Kanae Associates Ltd. in Tokyo. “But it’s positive to see that they’ve improved the compensation structure and the amount is reasonable enough to avoid incurring criticism from the public.”

Current GPIF President Takahiro Mitani, a former Bank of Japan official, has indicated he will step down when his five-year term finishes in March.

CIO Pay

The fund’s chief investment officer, a new role created after it changed its strategy to seek higher returns, will be paid about 30 million yen annually, Mori said. Hiromichi Mizuno, a former partner of London-based private-equity firm Coller Capital Ltd., became its first CIO this month.

GPIF won flexibility from the health ministry last March to pay higher salaries.

“GPIF decided the president’s new pay standard after a comprehensive review taking into account consistency with other public organizations,” including the central bank, Mori said in the phone interview yesterday. For the CIO, “we took into account the trend at private financial firms in order to secure highly professional human resources, without exceeding the pay level for the president.”

Bank of Japan Governor Haruhiko Kuroda’s salary will rise 1.3 percent to 34.7 million yen in the year ending March, the central bank said in November. Anne Stausboll, chief executive officer of Calpers, which manages about $299 billion, received $423,679 in base pay and bonuses in the year ended June, according to the U.S. fund.

Job Applicants

Yasuhiro Yonezawa, chairman of the GPIF’s investment committee, may use a private seminar in Tokyo next month to inform potential job applicants as part of its efforts to recruit money managers. Yonezawa is expected to discuss the qualifications it wants from future staff, according to Nobukiyo Akiyama, an official at Kotora Co., a Japanese executive search firm that’s organizing the Feb. 13 event.

GPIF is reallocating its assets as Prime Minister Shinzo Abe tries to sustain the economy’s exit from deflation. The fund will put half its assets into equities and cut local debt to 35 percent of holdings from 60 percent, it said on Oct. 31. It had 82 staff as of Oct. 1.

“It’s priceless to work at GPIF,” said Sakabe of Kanae Associates. “Many people want to join the fund because it’s the biggest, which makes it exciting and prestigious.”

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