The Era of 1,000 Trillion Won in the National Pension Fund (Comprehensive)

The National Pension Fund, which manages the national retirement funds, has entered the era of a 1,000 trillion won fund.

On the 28th, the National Pension Fund Management Committee held its first meeting to review and approve the "2023 National Pension Fund Settlement (draft)" and received reports on the "Progress of Strategic Asset Allocation for National Pension Fund Management," among other matters.

According to the 2023 National Pension Fund settlement results, the fund's net assets reached 1,035.8 trillion won, an increase of approximately 145 trillion won compared to 2022.

The net asset increase of 145 trillion won consists of 126 trillion won in fund management returns in 2023 and 19.3 trillion won accumulated after deducting benefit payments (39 trillion won) from premium income (58.4 trillion won).

The fund's management return rate in 2023 was 13.59% (financial sector return rate was 14.14%), marking the highest return rate since the establishment of the Fund Management Headquarters. By asset class, domestic stocks returned 22.12%, foreign stocks 23.89%, domestic bonds 7.4%, foreign bonds 8.84%, and alternative investments 5.8%, with the high returns on domestic and foreign stocks driving the fund's performance.

Since the establishment of the National Pension Fund in 1988 until the end of 2023, the average annual cumulative return rate of fund management was 5.92%, and the cumulative management profit totaled 578 trillion won, accounting for 55.8% of the fund reserves.

The Fund Management Committee plans to actively pursue improvements in fund management outlined in last year's 5th Comprehensive National Pension Operation Plan to establish a management system and capabilities suitable for the 1,000 trillion won fund scale this year.

First, to enable swift and flexible investment decisions, the strategic asset allocation system will be reorganized by introducing a "benchmark portfolio" to increase the flexibility of asset allocation.

The benchmark portfolio is composed of a combination of risk assets and safe assets and serves as a standard for medium- to long-term asset allocation. It has already been introduced and operated by major overseas public pension funds such as the United States' largest public pension CalPERS and Canada's pension investment CPPI.

To date, the Ministry of Health and Welfare, the Fund Management Headquarters, and the National Pension Research Institute have jointly discussed specific implementation plans for introducing a benchmark portfolio linked to the strategic asset allocation system of the National Pension Fund.

Going forward, the Fund Management Committee and related committees will focus on discussing tasks such as revising guidelines, changing benchmarks, and improving performance evaluations to introduce the new asset allocation system.