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Pension fund ROI

NPS set to post 7% return on investment for 2020 amid pandemic

Dec 17, 2020 (Gmt+09:00)


South Korea’s state pension fund is expected to post a 7% return on investment this year on the back of rebounding stock markets amid the COVID-19 pandemic.

The National Pension Service (NPS), the world’s third-largest pension fund with 785.4 trillion won ($718 billion) in assets under management, posted a return rate of 4.17% in the first nine months of the year.

“Barring the unexpected, the fund’s estimated 2020 return will hover around 7%,” Minister of Health and Welfare Park Neung-hoo, who also chairs the NPS’ asset management committee, said at a committee meeting on Dec. 16.

He said investment environments appear on a recovery path with local and global economic indices improving and the domestic stock market hitting record highs in recent sessions. Hopes for the development of coronavirus vaccines have also boosted market sentiment.

Hit hard by the pandemic, many developed countries have implemented a string of stimulus measures alongside loosened monetary policies to buttress a global economic slowdown.

The NPS’ expected 2020 return rate compares with its results for 2019, when it posted a return of 11.31%, the highest in its history.

In 2021, NPS will target to outperform its benchmarks by tentatively 0.22 percentage point, the same level as that of this year.

The pension fund also discussed how it will exert its shareholder rights in its invested companies.

The NPS has been pushing toward strengthened internal investment guidelines to ensure that management transfers, corporate restructuring and M&As in companies the pension fund invests in are carried out in a transparent manner. But some critics said such a move could restrict business activities.

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

In-Soo Nam edited this article.

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