NPS posts negative return in 2018 in its worst showing

The National Pension Service (NPS) reported the poorest investment results in its 30-year history, posting its first negative average return since 2008.

Its equity-heavy portfolio was blamed most for the negative 0.92% return on average in 2018, with stocks at home and abroad making up 35% of its portfolio.

Domestic stocks returned a negative 16.8%, outweighing the 11.8% return from alternatives, according to an NPS statement on Feb. 28.

Alternative investments account for 11.8% of the $570 billion pension service, still below its end-2018 target of 12.5%.

Last year’s result marked the first negative return for the world’s No.3 pension scheme since 2008’s minus 0.18%, in a reversal from the 7.26% in 2017 which was the best performance in seven years.

Two other South Korean pension funds – the Government Employees Pension Service and the Teachers’ Pension – also reported their first negative annual returns in 10 years of minus 1.7% and minus 2.45% respectively last year, according to a Yonhap Infomax report earlier this month.

Equities make up 30~35% of their investment assets.

By contrast, the Korean Teachers’ Credit Union and the Public Officials Benefit Association (POBA) secured 4%-range average returns last year. The share of equities is less than 20% of both institutions' investments.

By Chang Jae Yoo

yoocool@hankyung.com