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Japan's JJK Embraces Asset Owner Principles

The National Information Service Industry Pension Fund, also known as JJK, based in Tsukiji, Chuo Ward, Tokyo, has officially announced its commitment to accept and implement the Asset Owner Principles. This endorsement aligns with Japan's governmental initiative, the 'Plan for the Realization of an Asset Management Nation,' which was unveiled by the Cabinet Office on August 28, 2024. The Asset Owner Principles aim to ensure that public and corporate pension funds, life insurance companies, and other institutional investors act in the best interests of their beneficiaries while fulfilling their responsibilities in asset management, governance, and risk management.

The framework consists of five key principles that guide asset owners in making sound investment decisions that benefit their clients. By incorporating these principles into their practices, asset owners are expected to not only secure advantages for their beneficiaries but also contribute to the long-term growth and enhancement of corporate value for the companies they invest in. Moreover, it promotes healthy competition among financial institutions, thereby improving management capabilities.

JJK pledges to strengthen its asset management and governance in accordance with these principles, ensuring that it remains focused on the best interests of its members and stakeholders. Here is a closer look at the principles and how JJK intends to implement them:

Principles of the Asset Owner Principles

Principle 1: Purpose and Decision Making
Asset owners must define the purpose of their investments while taking into account the best interests of their beneficiaries. This involves establishing appropriate investment objectives and policies based on informed decision-making processes while regularly reviewing these objectives according to changing economic and financial conditions. JJK has committed to ensuring stable benefits for its contributors by focusing on secure pension payouts. Their investment strategy employs a diversified approach while remaining cognizant of their obligations to their members. Regular assessments and revisions of their investment policies will help them stay aligned with evolving market landscapes.

Principle 2: Expertise and Structure
In pursuit of beneficiaries' best interests, asset owners should operate based on specialized knowledge. Therefore, establishing and maintaining a competent structure is crucial. JJK has formed a dedicated Asset Management Committee and designated staff specializing in asset management to ensure that their strategies are effectively developed and implemented. Additionally, they plan to utilize external consultants and qualified personnel to enhance their investment oversight capabilities significantly, providing a stronger foundation for governance.

Principle 3: Investment Selection and Risk Management
Asset owners must select investment methods that prioritize beneficiaries' interests, implementing effective risk management—including diversification of investments—especially when delegating management to financial institutions. JJK aims to mitigate risks through diverse investments while continuously optimizing the selection of external management firms based on thorough evaluations and periodic reviews, ensuring that they align with their overarching investment strategies.

Principle 4: Accountability and Transparency
To fulfill its accountability to stakeholders, asset owners need to provide transparent information about their investment activities. JJK will regularly disseminate information regarding pension fund performance through various channels, including their website, newsletters, and seminars, fostering understanding and engagement among members and stakeholders. By promoting information sharing and facilitating dialogue, JJK reinforces its commitment to transparency.

Principle 5: Stewardship Activities
Asset owners must engage in stewardship activities that contribute to the sustainable growth of investee companies. JJK will actively monitor the stewardship activities of its contracted investment firms to ensure alignment with their investment goals. By participating in collaborative stewardship initiatives, such as the Corporate Pension Stewardship Promotion Council, they will enhance the efficacy of their monitoring efforts, thereby promoting responsible investment practices.

About JJK

Established under the authorization of the Minister of Health, Labour and Welfare, JJK is among Japan's largest comprehensive defined benefit pension funds, serving approximately 900 member companies and 130,000 individual members. The fund supports organizations in managing external retirement provisions and employee welfare while promoting talent acquisition and retention. Operating at one of the lowest cost levels in the industry, JJK provides essential services aimed at ensuring a secure future for employees through robust corporate pension systems.

For more information about JJK's principles and initiatives, visit JJK Official Site.