The public image of the National Pension Service is growing ever higher as its total funds reach 524 trillion won as of the end of March, ranking the third largest among pension funds in the world. It has 21.56 million members and pays pensions to around 4 million retirees.
To boost its already high public image, the pension fund announced a new promise for a increase in its operations in July last year when it moved its office to a new building in Jeonju Reform City in North Jeolla Province.
The NPS came on top of a list of performance evaluations of state-run organizations condusted by the Ministry of Strategy and Finance last month, getting an “A” in the ratings. NPS officials said the honor came as a result of strengthening the earnings of retirees, continuous effort for the stable operation of the fund, and to earn as much as possible.
The NPS also tried to have all those with jobs in the country become members of the NPS. The NPS allowed those with no steady work, but with daily jobs, to join the NPS. The pension service also took moves to have people with low earnings join them with the support of the Durunuri Insurance coverage. Such moves by the NPS paid off as membership increased by 440,000 last year from the previous year.
The NPS is slated to unleash a number of new measures to increase its membership. From November, the small business owners who couldn’t pay their premiums will be able to pay their back premiums. Until now, those who stopped paying premiums due to job losses or closures of their business could not, and their wives or husbands, subscribers of then NPS, cannot pay their premiums for them.
South Korea’s National Pension Service will stop hedging its overseas bond investments against currency fluctuations by the end of 2018 as the country’s biggest investor looks to cut costs.
The NPS’s hedging target rate will halve to 50 percent by the end of 2017 and to zero percent by the end of next 12 months, according to a statement from the Ministry of Health and Welfare Dec.24, 2015, which oversees the fund. The move comes as the NPS, which doesn’t hedge its stock investments, is seeking to boost the allocation of overseas assets in its portfolio.
The revision is “to prevent an increase in costs from large currency-swap trades,” the ministry said. South Korea’s won has weakened 5.9 percent versus the dollar in 2015, heading for a second straight annual decline.
"The influence of NPS in the currency market will only grow as the fund increasingly looks for overseas investments,” said Jeon Seung-ji, a currency analyst at Samsung Futures Inc. in Seoul. “Lower hedge ratio will boost demand for the dollar in the spot market while reducing trades via currency swaps.”
The public fund will also cut the ratio of overseas equities managed by external asset managers to 65 percent-85 percent starting January, from about 70-90 percent, to save on costs, according to Dec. 24’s statement. The Kospi Index of shares has climbed 3.9 percent in 2015, halting a two-year drop.
The NPS, which had 500 trillion won ($427.6 billion) in assets at the end of September, said in June it will increase non-Korean holdings to more than 30 percent by the end of 2020, compared with 21.9 percent last year. That’s in line with government plans to boost outbound investments to support a weaker currency and aid export competitiveness. The finance ministry announced measures in June including tax benefits for funds buying global equities and looser regulations on insurers’ currency hedging and foreign debt purchases.
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