NPS posts $56.5 bn return for first three quarters of 2021

South Korea's National Pension Service (NPS) Investment Management said on Nov. 29 it earned 67.4 trillion won ($56.5 billion) return for the first three quarters of this year. The world's third-largest pension fund achieved 67.3 trillion won in profit from equities, bonds and alternative investments and 100 billion won from welfare and other sectors. The rate of return as of the end-third quarter was 8%, its preliminary data showed.

The data showed NPS' fund reserves were 918.7 trillion won as of the end of the third quarter, up 85 trillion won from the end of 2020. The cumulative return from the pension fund’s inception in 1988 to Sept. 2021 reached 507 trillion won, according to the data.

The pension fund saw positive returns in equity investment. Domestic and overseas equities posted high annual returns of 8.2% and 22.7%, respectively, as hopes for a global economic recovery offset concerns over interest rate hikes. 

Meanwhile, domestic bonds saw a negative 1.28% return due to interest rate hikes. Interest rates on bonds rose thanks to expectations of an economic recovery, concerns over global inflation and The Federal Open Market Committee’s tapering plan announced in September, NPS explained. Overseas bonds recorded a positive 7.6% return as the won weakened as the dollar/won rate rose by 8.9% over the first three quarters of the year, the pension fund added.

The preliminary data said the annual return on alternative investment reached 10.1%, reflecting interest, dividends, profit and losses from transactions. The annual return on alternative assets of this year will be finalized in the annual performance evaluation at the end of June 2022.

Last week, The Korea Economic Daily reported NPS will dole out performance bonuses averaging 75 million won to its investment portfolio managers. In July, NPS approved the payments of an average of 86.7% of annual salaries to its investment managers based on the pension fund's three-year performance from 2018 to 2020. The bonus for its Chief Investment Executive Ahn Hyo-joon was set to be 98.4% of his annual salary.

Write to Jong-woo Kim at jongwoo@hankyung.com
Jihyun Kim edited this article.