National Pension Service Posts 11% Preliminary Return Last Year... Operating Income Hits 70 Trillion, Highest in 10 Years

[Asia Economy Reporter Eunmo Koo] The National Pension Service (NPS) recorded an 11% return on fund management last year. In particular, it earned about 70 trillion won in operating income, achieving the highest profit in the past 10 years.

According to the National Pension Service on the 11th, the annual fund management return rate for 2019 was tentatively estimated at 11%. Despite uncertainties in the domestic and international economic and financial environment, such as the trade dispute between the United States and China, the global stock markets showed strength supported by monetary easing and economic stimulus policies of major countries worldwide, and the won-dollar exchange rate maintained an upward trend, which is interpreted as driving the fund management performance.

Last year's NPS return rate surged compared to the performance in 2018. In 2018, the NPS recorded a negative return rate for the first time in 10 years. The fund management return rate of the NPS in 2018 was -0.92%, marking the second time the NPS showed negative results since the 2008 global financial crisis.

In 2018, the operating performance of major global pension funds overseas was also poor. The Government Pension Investment Fund (GPIF) of Japan recorded -7.7%, the California Public Employees' Retirement System (CalPERS) in the United States -3.5%, and the Dutch public pension fund (ABP) -2.3%, all showing negative returns worse than the NPS.

The NPS's return rates (operating income) over the past 10 years were 10.37% (30.1 trillion won) in 2010, 2.31% (7.7 trillion won) in 2011, 6.99% (25 trillion won) in 2012, 4.19% (16.7 trillion won) in 2013, 5.25% (23 trillion won) in 2014, 4.57% (21.7 trillion won) in 2015, 4.75% (24.5 trillion won) in 2016, and 7.26% (41.2 trillion won) in 2017.

Since the fund's establishment in 1988 until the end of November 2019, the average annual cumulative return rate was 5.70%, with cumulative operating income totaling approximately 357 trillion won.

The National Pension Service plans to maintain a diversification strategy in investments, including expanding overseas and alternative investments, as the fund size is expected to surpass 1,000 trillion won. It will focus on appropriate investment execution and strengthening proactive risk management.