March 12, 2018 / 11:36 AM / a year ago

Japan FSA urges corporate pension funds to fulfill better corporate governance: source

Women walk under a sign of Japan's Financial Services Agency in Tokyo, Japan June 29, 2017. Picture taken June 29, 2017. REUTERS/Issei Kato

TOKYO (Reuters) - Japan’s Financial Services Agency (FSA) will urge corporate pension funds to demonstrate fully their ability, in its first update to a 2015 corporate governance code, a government source with direct knowledge of the matter told Reuters.

The recommendation is aimed at achieving higher levels of pension investment and to facilitate dialogue between pension funds and companies they invest in, the source said on condition of anonymity as he is not authorized to speak to media.

The FSA will put forward its proposal at a panel meeting on the stewardship code and corporate governance on Tuesday, the source said.

Since Prime Minister Shinzo Abe swept to power in late 2012, he has been pushing for greater corporate governance and transparency through measures such as boosting the number of outside directors.

To achieve this, the FSA will urge listed companies to have their pension funds enhance expertise in investment, and to appoint the right people in order to fully demonstrate their function as “asset owner”, the source said. The agency will specifically call on listed companies to disclose efforts.

Analysts have long pointed out that Japan’s corporate pension funds lack adequate functions to check investments, as some of them put inexperienced people in investment roles and others pass on the whole investment to institutions.

Reporting by Takahiko Wada; Writing by Tetsushi Kajimoto; Editing by Robert Birsel

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