National Pension Service Approves 0.20%p Excess Return Target for Next Year's Operations

The National Pension Service has set the target excess return rate for the Fund Management Headquarters next year at 0.20 percentage points, the same as this year.

Minister of Health and Welfare Cho Kyoo-hong speaking at the 6th National Pension Fund Management Committee held at the Government Seoul Office in Jongno-gu, Seoul on the 15th.

Photo by Ministry of Health and Welfare

The National Pension Fund Management Committee (hereinafter referred to as the Fund Committee) held the "6th Meeting of 2023" on the 15th at the Government Seoul Office in Jongno-gu, Seoul.

At this meeting, the committee deliberated and resolved on the "2024 Target Excess Return Rate" and the "Extension of the Temporary Strategic Currency Hedging Ratio Adjustment Period for the National Pension Fund," among other matters.

The Fund Management Committee sets the target excess return rate for the fund each year. It provides the Fund Headquarters with guidelines on the level of active management of the fund. The target excess return rate for 2024 was decided to remain at 0.20 percentage points, the same as this year.

Additionally, the committee decided to extend the temporary strategic currency hedging ratio adjustment period for the National Pension Fund until 2024. In December last year, the Fund Committee temporarily raised the strategic currency hedging ratio from 0% to up to 10%, depending on market conditions, to prepare for currency losses following the stabilization after a sharp rise in exchange rates.

Since exchange rates remain at a high level, the Fund Committee decided to extend the period for the increased strategic currency hedging ratio until next year to prepare for potential currency losses. Following this decision, the National Pension Service plans to enter into a foreign exchange swap contract with the Bank of Korea.

Meanwhile, the Fund Committee received a report from the Fund Management Headquarters on the "Fund Management Status as of the End of September 2023." As of the end of September, the National Pension Fund reserves stood at 984 trillion won. With a return rate of 8.66% and earnings of 80.3 trillion won, most of last year's fund evaluation losses have been recovered.

Minister Cho Kyu-hong urged, "As a volatile market is expected to continue next year, I ask the Fund Management Headquarters to ensure thorough fund management, including proactive risk management and market response."