TOKYO Thu Mar 19, 2015 12:37am EDT

Three Japanese public pension funds with a combined $250 billion in assets will follow the mammoth Government Pension Investment Fund and shift more of their investments out of government bonds and into stocks, two people involved in the decisions said.

The three funds and the trillion-dollar Government Pension Investment Fund, the world's biggest pension fund, will announce on Friday a common model portfolio in line with asset allocations recently decided by the GPIF, the people told Reuters.

Assuming, as expected, the three smaller mutual-aid pensions adopt the portfolio, that would mean shifting some 3.58 trillion yen ($30 billion) into Japanese stocks, a Reuters calculation shows.

The GPIF in October slashed its targeted holdings of low-yielding government bonds and doubled its target for stocks, as part of Prime Minister Shinzo Abe's plan to boost the economy and promote risk-taking.

GPIF in October slashed its targeted holdings of low-yielding government bonds and doubled its target for stocks, as part of Prime Minister Shinzo Abe's plan to jolt Japan out of two decades of deflation and fitful growth and promote risk-taking.

The shift to riskier investments by the 137 trillion yen ($1.1 trillion) GPIF has helped drive Tokyo Stocks .N225 to 15-year highs this week because of the fund's size and because it is seen as a bellwether for other big Japanese institutional investors.

The new model portfolio, part of a government plan to consolidate Japan's pension system in October, will match the new GPIF allocations of 35 percent in Japanese government bonds, 25 percent in domestic stocks, 15 percent in foreign bonds and 25 percent in foreign stocks, the sources said.

Final investment amounts may vary, as the three funds are not required to follow the model and they, like GPIF, will have some leeway above and below their targeted levels to manage their portfolios in practice, the sources said.

The smaller funds will also have latitude to keep some of their assets in cash, which GPIF no longer does, the sources said.

Shinichiro Mori, head of GPIF's Planning Division, said nothing has been decided about the model portfolio.

Spokesmen for the other funds - the 18.9-trillion-yen Pension Fund Association for Local Government Officials, the 7.6-trillion-yen Federation of National Public Service Personnel Mutual Aid Association and the 3.8-trillion-yen The Promotion and Mutual Aid Corporation for Private Schools of Japan - declined to comment on their asset-allocation plans.

($1 = 120.1000 yen)