As a way to periodically confirm the asset composition to be maintained in the medium- to long-term to meet our asset management goals, we revise our policy asset mix and asset allocations strategies through regular reviews of pension asset liability management (ALM).
Our target for the fiscal year ending March 2025 is to implement pension ALM, and to confirm, review and decide on the policy asset mix, with the aim of beginning implementation of the revised strategy in the fiscal year ending March 2026.
Pension ALM refers to strategies designed to comprehensively manage the assets and liabilities of pension assets and achieve balance between assets and liabilities. By implementing pension ALM we aim to enable assets to cover future pension benefit payments while managing risks and maximizing investment returns. Specific activities conducted as part of pension ALM include forecasting future pension benefit payments, assessing current assets, and analyzing the gap between the assets and liabilities of pension assets.
The policy asset mix refers to the ratios of asset allocations for pension assets based on a long-term investment strategy. These ratios are determined based on target return rates, risk tolerance, liquidity needs and regulatory requirements, and are designed to ensure stable returns in the long-term while managing risks. By periodically reviewing the policy asset mix, we adapt to fluctuating market conditions and the financial status of pension assets to maintain an optimal asset allocation.
In addition, the periodic review of asset allocation strategies based on revisions to the policy asset mix is undertaken by taking into account the following key factors.