Korea's NPS maintains good grade despite heavy losses: finance ministry

National Pension Service (NPS) of South Korea, the world’s third-largest pension fund with 939 trillion won ($713 billion) in assets as of end-February, maintained a “good” grade from the finance ministry despite its worst-ever annual loss in 2022.

The Ministry of Economy and Finance assessed the operations of 24 funds in Korea, such as retirement pension schemes and development funds, and announced the evaluations at a Cabinet meeting on Tuesday.

The government assessed the funds’ financial structures, business operations, profitability and other indicators. It gives scores out of 100 and one of six grades, excellent, very good, good, fair, poor and bad.

NPS scored 77.7 this year, slightly down from 79.3 last year.

Despite its 8.28% loss on investment last year, the fund held a “good” grade for two years in a row as it outperformed the return of its five global peers – Japan’s Government Pension Investment Fund (GPIF), Canada’s CPP Investment Board (CPPIB), Norway’s the Government Pension Fund Global (GPFG), the California Public Employees' Retirement System (CalPERS) and Dutch pension fund ABP – which averaged a negative 10.55% in 2022.

The ministry also gave an excellent grade to Teachers’ Pension (TP), a fund for private school educators and employees managing 21.5 trillion won in assets as of end-2022. It posted a negative 7.75% return last year, including an 8.28% profit from alternative investments.

The Government Employees Pension Service (GEPS), managing 7 trillion won in assets as of end-2022, was graded as “very good” for its fund operations. It posted a negative 4.4% return on investment last year, including a 10.2% profit from alternative investments.

Meanwhile, the government has recommended restructuring and improvement of 60 projects in 19 funds, including allocation of frequency bands for broadcasting and support for the sports industry and cultural and tourism events.

The ministry recommended the merger of two funds, for broadcasting and information communications, as both have similar financing structures and business goals.

Write to Kyung-Min Kang at kkm1026@hankyung.com

Jihyun Kim edited this article.