The National Pension Service posted 231.6 trillion won in operating revenue last year, the largest since the fund was created. The fund's reserves also swelled to 1,458 trillion won, putting the "1,500 trillion won fund era" within reach. Thanks to this astonishing return, there is growing optimism that the timeline for the pension's depletion could be pushed back from earlier projections.
The 231.6 trillion won in revenue the National Pension Service earned last year is 4.7 times the annual pension payment amount (about 49.7 trillion won). With just the money earned in one year, it effectively secured funding for nearly five years of future pension payments.
In comparisons with major overseas pension funds, the National Pension Service's performance stood out. It outpaced global asset management powerhouses such as Japan's GPIF (12.3%), Norway's GPFG (15.1%), and Canada's CPPIB (7.7%), proving its "strong management capabilities."
The pace of the fund's reserve expansion is also steep. Last year's reserves were 1,458 trillion won, surging more than 20% from the previous year (1,212.9 trillion won). The accelerating growth through 2023 (16%) and 2024 (17%) suggests that the fund's asset allocation strategy has settled onto a stable track.
Buoyed by the National Pension Service's record-breaking rate of return, expectations are rising that the fund's depletion point will be delayed. President Lee Jae-myung, marking the KOSPI's break above 5,000 on the 23rd of last month, said, "Concerns about the National Pension Service running out or worries that people won't receive pensions are now things we can set aside," expressing confidence.
Experts also agree that a higher investment return is the decisive variable in pushing back the depletion timeline. That is because the more the operating return exceeds the long-term average, the more it serves as a practical engine to delay the fund's "deadline."
Nam Jae-woo, senior research fellow at the Korea Capital Market Institute, said, "If fund management is done well and generates good revenue, the depletion point can be extended by that much," adding, "Like a kind of compound effect, a larger fund can make the fund grow even more."
Brokerages analyzed that if the National Pension Service's performance continues, it will not only delay the depletion timeline but also invigorate investor sentiment in the stock market.
Hwang Seung-taek, head of research at Hana Securities, said, "Because the National Pension Service is a major buyer, it has the effect of giving the market a premium," adding, "Because the National Pension Service is such a highly trusted investor, it can improve other investors' sentiment, creating a virtuous cycle."
However, some say it may be difficult in reality to sustain the fund's return on a continuous basis. Amid concerns about the National Pension Service's depletion, pension reform was carried out last year for the first time in 18 years.
The Fund Management Committee analyzed at the time that the reform extended the depletion point by eight years, from 2056 to 2064. It also judged that if the fund's return is raised by an additional 1 percentage point, the depletion point would be 2071, a total extension of 15 years.
The National Assembly Budget Office also estimated that if the National Pension Service's investment return is raised to 6.5% per year, the depletion point would be delayed from 2057 to 2090.
Experts say the fund should not become complacent over a temporary earnings boost. Park Chang-gyun, senior research fellow at the Korea Capital Market Institute, said, "Raising the return by 1 percentage point (p) does not mean a one-year result but lifting the long-term average return over the next 20 to 30 years," emphasizing the importance of sustainability.
There was also sharp criticism calling for diversification of the management strategy. Park said, "Stock returns tend to be proportional to a country's potential growth rate, but the National Pension Service is currently investing mainly in the United States and Europe, where growth is stagnant." Park advised, "On the premise of appropriate risk diversification, we should proactively review expanding investment in emerging markets to enjoy their growth potential, a 'textbook investment strategy.'"