National Pension Service's 5-Year Target Return Rate at 5.6%... Expansion of Overseas and Alternative Investments

The National Pension Service (NPS) has set a target return of 5.6% for the next five years and decided to continue expanding the proportion of overseas and alternative investments to enhance long-term returns.

The NPS Fund Management Committee held its second meeting of 2023 on the 31st at the Seoul Northern Regional Headquarters and approved the 2024?2028 mid-term asset allocation plan for the National Pension Fund, reflecting these details.

The mid-term asset allocation plan of the NPS is a five-year fund management strategy that determines the fund's target return and target proportions by asset class based on analyses of domestic and international economic outlooks, expected returns, and risks by asset class.

At the meeting, the committee decided to set the target return at 5.6% for the next five years, considering forecasts for real economic growth and inflation rates.

The target asset allocation by the end of 2028 to achieve this was set at approximately 55% equities, 30% bonds, and 15% alternative investments.

The committee explained that the target proportions by asset class were determined comprehensively, taking into account the need for active fund management to ensure the sustainability of the National Pension’s finances.

The committee also stated that it plans to maintain the policy direction of gradually expanding overseas and alternative investments in the mid to long term to increase the fund’s long-term returns.

Last year, amid worsening domestic and international economic conditions, the National Pension recorded its lowest-ever return of -8.22%. However, in the first quarter of this year, it achieved a 6.35% return, generating investment income of 58.4 trillion won, significantly recovering from last year’s loss of approximately 79.6 trillion won.