Mitsubishi Materials Corporation

Financial Risks

Investment Allocation Considering Safety and Profitability in Pension Asset Management

Investment allocation considering safety and profitability in pension asset management

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.

About the Pension Asset Liability Management

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.

About the Policy Asset mix

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.

Economic outlook and changes in the market environment
This is considered to respond to the balance between investment returns and risks based on changing conditions in the bond market, stock market and other markets, since changes in the economic outlook can cause a change in the returns and risks for each managed asset.
Changing financial condition of pension assets
This is considered to response to the status of pension asset revenue (contributions) and outlays (pension benefits) due to fluctuating in the amounts of pension benefits paid as the number of recipients changes. This is also considered since long-term pension asset goals and strategies can change due to fluctuations in pension recipients. Depending on circumstances, there may be a switch to a more conservative asset management policy, for example.
Risk management and evaluation of investment assets
When assets are excessively concentrated in a particular class, we review asset allocations to diversify risk, and if actual asset returns have not met targets, we review strategies to ensure the targets are achieved. When pension asset risk tolerance has changed, the allocation ratios of pension assets will be changed.
MMC, MBS, DFF Inc., Trans-Asia Inc., ideaship Inc., KPMGあずさサステナビリティ

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