NPS pays hefty performance bonus after strongest 2019 return

The National Pension Service is paying handsome performance bonuses to its internal investment staff after the world’s third-largest pension fund posted the strongest investment return of 11.34% in its history last year.

About 280 in-house fund managers at the NPS’ Investment Management department are set to receive 73.7% of their basic annual salary as performance bonuses for the year of 2019, NPS said on July 3.

That compares with the 2018 performance-based pay of 45.4% and is believed to be the biggest amount since the Investment Management department was established in 1999, according to an NPS spokesman.

Performance bonuses are based on the annual investment performance of the last three years in the ratio of 5:3:2. The most recent year’s performance represents the largest share.

NPS has bumped up basic salaries for internal investment staff to retain them after the Investment Management's headquarters moved to Jeonju, a provincial city, in 2017.

The investment return of 11.34% translated into 73.4 trillion won ($61 billion) in proceeds, marking the biggest investment proceeds since 1999.

The 2019 result was a turnaround from the negative 0.89% in 2018.

By asset class, global equities became the best-performing segment last year, logging a 31.64% return and reversing the negative 5.60% in 2018.

Alternatives returned 9.82%, compared with 12.05% a year before.

Both 2019 and 2018 figures were slightly revised from the February announcement.

“NPS will step up risk management, respond to market swings flexibly and push ahead with the plan to expand overseas investments to increase long-term returns,” welfare minister Neung-hoo Park said in a statement released after presiding over the NPS’ investment committee meeting.

The committee finalized the 2019 results and approved the bonus payment on July 3.

Write to Jung-hwan Hwang at jung@hankyung.com