NPS logs record high annual return in 2019

South Korea’s public pension fund National Pension Service has posted a return rate of 11.34 percent last year, hitting a 10-year record high, Minister of Health and Welfare Park Neung-hoo said Friday.

“After recording a return rate of minus 0.89 percent in 2018, last year’s figure rebounded within just a year. It is the highest return rate since establishing the NPS Investment Management Committee in 1999,” said Park, who also heads the state pension’s asset management committee.

Hit by the coronavirus pandemic, the state pension chalked off a return rate of minus 6.08 percent in the first quarter of this year. While Park admitted that the world’s third-largest pension fund’s rate of return has lowered, he vowed to devote all of his effort to stabilizing the fund.

“The negative impact on the financial market due to COVID-19, the return rate of the state pension fund is currently underperforming. However, we will strengthen risk management and respond to the volatile market in a flexible manner,” he added.

To raise the fund’s long-term profit rate, the NPS will continuously proceed with its previous plan to lowering the exposure of risky assets such as domestic stocks, but instead expanding overseas investment.

A month earlier, the state pension fund operator called for the proportion of overseas holdings to reach around 55 percent of the total, with stocks making up 35 percent, bonds and alternatives that cover real estate, energy and infrastructure accounting for 10 percent each.

The NPS targets to strive for a 5.2 percent return rate on its investments in the 2021-2025 period by securing stability and maximizing profits through diversification of the fund‘s portfolio, the asset management committee explained.

By Jie Ye-eun (yeeun@heraldcorp.com)