NPS to Decide Domestic Stock Allocation by Year-End... Mandatory Entry into Retirement Pension Market

Kim Sungjoo's Press Briefing
Securing Public Retirement Income... Prioritizing Higher Returns
Low Returns and High Fees Among Private Retirement Pension Operators
"The National Pension Service Will Step In and Play the Role of a 'Catalyst'"

The National Pension Service (NPS) is leaving open the possibility of increasing the proportion of domestic stocks in its portfolio, separate from the asset rebalancing (asset allocation adjustment) scheduled to resume in July. However, the organization has stated that the final decision will be made by the end of the year, depending on market conditions. In addition, the NPS has emphasized its intention to actively enter the retirement pension market, which is valued at 501 trillion won.

Kim Sungjoo, Chairman of the National Pension Service, highlighted these points during an online press conference on the 23rd. Chairman Kim said, "The adjustment in the proportion of domestic stocks was not made to boost the stock market, but rather as a decision reflecting structural changes in the Korean stock market. Whether we maintain the current trend, reduce, or further increase the domestic stock allocation should be decided based on how the market evolves, and it is not something to judge or conclude now."

Kim Sungju, Chairman of the National Pension Service, is holding an online press conference at the Jeonju office building on the 23rd. National Pension Service

Previously, at the end of last month, the NPS Fund Management Committee raised the target allocation for domestic stocks from 14.9% to 20.8% for the end of this year. Chairman Kim explained, "For now, the committee has decided to gradually reduce the domestic stock allocation by 0.5% each year starting next year. We will have another opportunity to assess the situation at the end of this year and make a further decision."

The NPS will resume domestic stock rebalancing, which had been temporarily suspended in January this year, starting next month. As the local stock market has surged, the value of the NPS’s domestic stock holdings has risen sharply, prompting the organization to consider realizing gains and adjusting its portfolio. Due to this, there have been concerns in the market that between 50 trillion and 60 trillion won worth of stocks could be put up for sale.

Regarding this, Chairman Kim stated, "Because the NPS has significant influence on the market, we cannot disclose our trading strategies," and added, "We are operating under the principle of minimizing market impact."

Meanwhile, Chairman Kim also expressed the NPS’s strong intention to actively participate in the fund-type retirement pension market. He pointed out, "The 501 trillion won retirement pension market has generated returns of only around 3% over the past five years, while the fees have amounted to 2 trillion won. The NPS, with 1,800 trillion won under management, has operating costs of only about 3 trillion won for personnel, and its returns are even higher. If the NPS participates, it would further benefit the retirement security of the people."

The NPS has also stated that, if it participates in the fund-type retirement pension market, it will operate strictly on a non-profit basis. The organization plans to manage the retirement pension with a separate account from the existing NPS fund and to apply the same level of fiduciary responsibility and internal control standards as the NPS fund itself. Chairman Kim asserted, "The NPS is the institution that has best managed diversification, asset allocation, and risk management. We expect to play the role of a catalyst, stimulating competition among private operators."

Chairman Kim also clarified the NPS’s stance on the recent controversy involving Starbucks. He said, "The NPS is an investor, not a problem-solver for social issues, and does not get involved in every matter. We only become actively involved if an issue arises at a company we have invested in and a loss is anticipated as a result."

This content was produced with the assistance of AI translation services.