NPS set to post record-high returns in 2023

A visitor walks into a National Pension Service branch in northwestern Seoul on Thursday. (Yonhap)

The National Pension Service is expected to have logged over 12 percent in returns in 2023, marking its highest-ever yield.

According to news reports Friday, the state pension fund may have registered its highest profit since the National Pension Service Investment Management was founded in 1999.

“We cannot confirm the exact figures as a regulatory filing has not been made yet. The exact numbers are to be released in late February,” an official from the NPS said.

However, seeing that the NPS posted an investment return of 80.38 trillion won ($61 billion) from the January-September period, making its managed assets stand at 984.16 trillion won by the end of September, the yearly yield for 2023 is likely to have surpassed 100 trillion won, meaning the value of its assets under management will have reached over 1,000 trillion won.

Last year, the pension fund got a boost from a rebound in the global investment market and favorable currency rates as the Korean won strengthened against the US dollar compared to 2022, according to the operator.

The Kospi, which stood at 2,465.07 points at the end of September, wrapped up at 2655.28 points on Dec. 28, up over 200 points. Nasdaq also showed a 43.4 percent surge in the same period, while the Dow Jones Industrial Average jumped by 13.7 percent.

The record-high returns come in the wake of the pension fund logging its worst-ever returns at minus 8.28 percent in 2022 due to the slowdown in the global investment environment amid high-interest rates practiced by major economies around the world.

In 2022, the fund saw a 79.6 trillion won drop in its managed assets, making the figure come down to 890.5 trillion won.

It was the third time for the NPS to log a negative return in its yearly yield, following the minus 0.18 percent return in 2008 amid the global financial crisis and the minus 0.92 percent return in 2018 due to US-China trade tensions and monetary tightening policies.

However, though the fund's investments were lucrative last year, the fund reserve remains tight due to the looming population decline. It is expected to run out from 2055, two years earlier than previously projected.

On Thursday, data showed that among the 5.4 million people who received a basic pension from the NPS as of the end of September, nearly half, 49.9 percent, received less than 400,000 won a month. The average pension payment was 619,715 won.

The NPS is one of the three largest state funds in the world, along with Norway’s Norges Bank Investment Management and Japan’s Government Pension Investment Fund.

By Im Eun-byel(silverstar@heraldcorp.com)