"NPS loses 240 trillion won, 1990s-born get zero pension"... What's behind rumors spreading after the KOSPI plunge?

Cumulative return of 14.84% through July
Distinguish lower valuations from realized losses
Rebalancing deferred... not a ban on stock sales
Fund depletion projected for 2069... separate from suspension of pension payments

As the domestic stock market has recently experienced sharp volatility, rumors surrounding the National Pension Service (NPS) have been spreading rapidly online. The claims allege that the government banned the NPS from selling stocks to prop up the market, causing losses of hundreds of trillions of won and leaving younger generations born in or after the 1990s with no pension benefits, while bringing the fund depletion date forward by more than 10 years. However, a fact-check found no evidence of losses totaling KRW 240 trillion, and the NPS has not been subject to a blanket ban on stock sales.

The Reality Behind the “KRW 240 Trillion Loss” Claim: Confusing Declining Valuations with Realized Losses

The controversy began with the fall in the value of NPS stock holdings following a sharp drop in the KOSPI. At the end of July, the NPS fund stood at KRW 1,684.2 trillion, down KRW 181.4 trillion in a month. Of that decline, KRW 124.6 trillion came from the lower valuation of domestic stocks. Financial data provider FnGuide also estimated that the value of shares held by the NPS in 287 listed companies in which it owned at least 5% fell by about KRW 182.4 trillion, from KRW 515.9 trillion at the end of June to KRW 333.5 trillion on October 15.

Experts, however, say it is important to distinguish a decline in asset values from investment losses realized through actual trades. The value of assets managed by public pension funds, including stocks and bonds, fluctuates continually with market conditions. The NPS reported an officially measured cumulative investment return of 14.84% for January through July this year. Although gains had moderated from their peak in the first half of the year, its performance since the start of the year remained positive. The overall fund's final profit or loss following the sharp market decline will need to be assessed carefully using future year-end figures. It is therefore inappropriate to equate fragmented figures showing declines in asset valuations directly with massive realized losses.

The Truth Behind the “Stock Sale Ban” Claim and the Rebalancing Deferral

The rumor that the government forcibly blocked the NPS from selling stocks is also false. In January, the National Pension Fund Management Committee postponed until the end of June a measure requiring the NPS to sell stocks to bring its domestic stock allocation down whenever it exceeded the prescribed limit. In other words, it relaxed the rules so that the NPS would not have to sell immediately even if stock price gains pushed the allocation higher. In May, it also raised the target allocation for domestic stocks from 14.9% to 20.8%. This was an adjustment to the investment allocation, not a ban on stock sales.

In fact, according to the Korea Exchange, pension funds and other institutional investors, including the NPS, were net sellers of about KRW 4.5 trillion in the KOSPI market in May and June. The mandatory allocation adjustment that had been deferred also resumed in July.

Claim That Fund Depletion Has Been Brought Forward by 10 Years Is False... “The State Is Responsible for Pension Payments”

The claim that fund depletion has been brought forward by 10 years is based on a false premise. Some have cited 2055 as the previously projected depletion date and argued that falling stock prices could move it forward to 2045-2047. However, 2055 was merely an estimate presented in the Fifth National Pension Financial Review in 2023.

The latest official projection for when the fund will be depleted, released by the National Assembly Budget Office after accounting for the pension reform legislation and recent investment performance, is 2069, about four years later than the previous projection. While a short-term market decline can place pressure on long-term finances, it is not statistically valid to arbitrarily move up the fund depletion date decades in the future based solely on temporary fluctuations in stock indexes.

In particular, Article 3-2 of the revised National Pension Act, which took effect this year, explicitly states that the state is responsible for ensuring stable and sustained pension payments. Even if the fund is depleted, the obligation to pay pensions will remain in place, including through government financial support. The claim that generations born in or after the 1990s will not receive a single penny in pension benefits is therefore false.

Experts urge the public not to be swayed by rumors that feed on short-term market fears, but to take a clear-eyed view of the pension system based on long-term investment performance and reasonable risk-management indicators.

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