Japan's $1.2 trillion retirement fund will increase its allocation target for shares to about 25 percent from 12 percent, the Nikkei newspaper reported without attribution.

The Government Pension Investment Fund will also boost its holdings of foreign bonds and stocks to about a combined 30 percent from 23 percent, while reducing domestic notes to the 40 percent level from 60 percent, the Nikkei reported on Saturday.

Investors are awaiting any word from the GPIF on its new allocations after a government-picked panel advised it to reduce bonds to boost returns. Takatoshi Ito, a member of the panel, said his personal recommendation is to increase the target for Japanese and foreign stocks to about 25 percent each and cut notes to around 35 percent.

The fund can adjust its share allocation to 6 percentage points higher or lower than the target, meaning that after the change it will be able to hold about 30 percent at most in domestic equities, the Nikkei reported.

The Topix share index has dropped almost 10 percent this year after jumping 51 percent in 2013 as Prime Minister Shinzo Abe pledged to end 15 years of deflation with monetary and fiscal stimulus. The nation's benchmark 10-year bond yield was at 0.475 percent on Oct. 17, the lowest in the world after Switzerland, limiting returns on debt investment.

Ito said that the GPIF would be "stupid" to announce its new investment strategy before adjusting asset allocations. Publishing targeted weightings in advance would move markets, forcing the fund to buy at highs and sell at lows, he said in an interview on Oct. 14.

The fund's asset review could come as late as December, as GPIF officials, members of its investment committee and the health ministry have different views on the best timing and approach, Ito said.

Spokesmen at the GPIF and the health ministry, which oversees public pensions, weren't immediately available to comment.