UPDATE 1-Japan public pension fund to keep asset model-Nikkei

* GPIF decides to keep current allocation model -Nikkei

* Model calls for a 67 pct weighting in JGBs

* GPIF holds assets of $1.4 trln, larger than GDP of India (Adds comparisons with Calpers, debate on higher returns)

By Chikafumi Hodo

TOKYO, March 10 (Reuters) - Japan's public pension fund, the world's largest, will not change its asset allocation model for the next five years after the Health Ministry urged the fund to keep investing in safe assets, the Nikkei business daily reported.

The Government Pension Investment Fund (GPIF) holds assets of about $1.4 trillion, larger than the gross domestic product of India, and is a major force in financial markets, particularly the Japanese government bond market.

But it has often been criticised for being too conservative, generating a return of just 6.5 percent in April-December, compared to a 20.7 percent return generated by the California Public Employees' Retirement System, or Calpers.

While expectations were low for big changes, the debate about adopting a riskier model has heated up after Internal Affairs Minister Kazuhiro Haraguchi said in January it should seek higher returns by investing in areas like emerging markets.

The GPIF's current model calls for a 67 percent weighting in domestic bonds, 11 percent in domestic stocks, 9 percent in foreign stocks and 8 percent in foreign bonds.

"We weren't expecting a major change in the GPIF's portfolio. We are watching the debate over raising higher returns, but it will be tough for the GPIF to make a big change," said a JGB trader at a major Western securities house.

Both the Health Ministry and the GPIF believe the fund should be managed conservatively as Japan has a rapidly ageing population.

An official of the Health Ministry, which supervises the fund, said last month the ministry hopes the current asset allocation model, which is under review, would be the base for a new model.

A GPIF official declined to comment on the report, adding that its new allocation model will be announced before the start of the new financial year in April after receiving approval from the ministry.

The GPIF is set to have a shortfall of 4.74 trillion yen in the current financial year, although most of that is expected to be covered by proceeds from maturing JGBs.

The fund is likely to need more than 6 trillion yen in cash for pension payouts during the next financial year.

"The market's major concern is when and by how much the GPIF will sell JGBs to cover shortfalls for the next financial year," the trader said. (Reporting by Chikafumi Hodo; Editing by Edwina Gibbs)