By Kang Seung-woo
The National Pension Service (NPS) has set its sights on becoming the world’s largest public pension fund on the back of recent impressive performances.
The NPS topped the 300 trillion won mark in assets much earlier than expected in July last year, and, as of December, its assets totaled 323.5 trillion won, making it the fourth-largest pension fund in the world behind Japan’s Government Pension Investment Fund (GPIF), Norway’s Government Pension Fund (GPF) and ABP, the national pension fund of the Netherlands.
The fund surpassed 100 trillion won in 2003 and 200 trillion won in 2007 before reaching the current milestone, with an annualized growth rate of 30 percent.
According to the fund’s estimates, the NPS is expected to see its total assets reach 500 trillion won in 2015 and 2,465 trillion won in 2043 to be the largest in the world.
The impressive achievements have come as the NPS is projected to post its highest investment returns in 2010, as its profits from its investment in stocks, bonds and property chalked up 10.2 percent as of the end of November last year.
In the cited period, the NPS’s proceeds from asset management reached a record-high 29.6 trillion won and the total accumulated income amounted to 140.2 trillion won.
It is the second straight year for the NPS and its Chairman Jun Kwang-woo to achieve such results, as it also hit a 10-year high in earnings in 2009 after tallying 10.39 percent in profits from fund investments and other types of portfolio management.
The NPS attributes its consecutive solid showings to its diversified investments.
It discarded a bond-focused portfolio and shifted into a variety of investments, including domestic stocks.
Thanks to bullish markets, the NPS increased its ratio of stock investments from 16.6 percent to 17 percent, which paid off, while it also saw high profits in its investments in domestic bonds, accounting for 67 percent of its total assets. In addition, large earnings from investments in overseas property contributed to the all-time record high.
“The NPS wrote a new chapter in its history with our reserve fund topping 300 trillion won in total assets,” the chairman said.
In addition, the NPS has seen a rapid surge in the number of voluntary subscribers and those who declare their taxable incomes voluntarily for their pension plans, as a result of its year-long campaign to enlist more subscribers.
According to the body, the number of subscribers currently increases by 2,700 per day, compared with 610 in 2008.
The NPS was established in 1987 to provide pension benefits in the contingency of old-age, disability or death of a breadwinner with a view to contributing to the livelihood stabilization for the promotion of the welfare of the nation.
In addition, Korea’s public pension fund is responsible for administering insured person’s personal records, determining pension contributions, paying benefits, managing the national pension fund, and implementing welfare business for insured persons and beneficiaries.