The market values of Japan's two public pension schemes grew in fiscal 2003, which ended in March 2004, thanks to a stock market rally, the government said Thursday.

The first of the two schemes -- the employee pension scheme for salaried workers -- posted its first surplus in three years as investment gains rose in line with the Nikkei stock average, which surpassed 10,000 in fiscal 2003 after wallowing below 8,000 in fiscal 2002.

The 3.797 trillion yen surplus appears to be a complete reversal from the over 2 trillion yen deficit the scheme had in fiscal 2002.

But the surplus includes about 3.5 trillion yen in transfers from private pension funds.

Many private pension funds terminated their public pension fund management services and transferred the public pension portions of their reserves to the struggling program. Without the transfers, the surplus in fiscal 2003 would have been 300 billion yen.

The second scheme -- the national pension scheme for self-employed workers and part-timers -- posted a surplus of 245.9 billion yen in fiscal 2003, its first surplus in two years.

Revenue for the employee pension scheme in the year rose by more than 7 trillion yen from the previous year to 35.237 trillion yen. While investment gains rose, however, premium revenue fell by 960.8 billion yen on a decline in the number of employees and their incomes.

Expenses increased by 850 billion yen to 31.44 trillion yen as pension benefit payments rose because of the rapidly aging population. Reserves for the employee pension scheme swelled by 3.844 trillion yen to 135.9 trillion yen.