NPS took big losses on Korean stocks this year

The National Pension Service (NPS), amid worries about its accelerating depletion, has lost money on its investments in the Korean stock market this year.

According to a study released Monday by lawmaker Kim Sun-rye of the opposition Liberty Korea Party, as of May the NPS’s investments in the local stock market suffered losses of 1.18 percent.

In May alone it lost 1.56 trillion won ($14 billion). This is a stark contrast to the profits of 26.31 percent it made last year.

The NPS’s investments in overseas stocks also aren’t doing too well, with yields at 1.67 percent as of May, far lower than the profit of 10.68 percent it made last year.

The NPS isn’t just struggling in the stock market.

The yield on its overall asset management between 2013 and 2017 averaged between 4 and 7 percent. But as of May this year it was at 0.49 percent.

One of the biggest reasons behind the NPS’s struggles is believed to be its inability to fill the chief investment officer (CIO) position.

Since July last year, the key position of CIO, which was previously held by Kang Myoun-wook, has remained vacant. Earlier this year, the Blue House was found to have intervened in the selection process for the CIO position by contacting Kwak Tae-seon, the former CEO of Baring Asset Management Korea, who was a front runner for the position but was later ruled out on suspicions of draft-dodging.

The NPS restarted its search for a new CIO last month. This time, the most likely candidate is former Hanwha Investment & Securities CEO Chu Jin-hyung.

However, Chung would also be a controversial pick, as he worked for the Moon Jae-in camp during the last presidential election, raising doubts about the NPS’s independence from the government.

The national pension fund is currently worth 634 trillion won, of which 303 trillion won is management profit. If the investment yield rises by 1 percentage point, this could delay the fund’s depletion by five to six years, experts say.

“When looking at how the pension fund is being managed, it’s concerning whether its depletion could be sped up as the principle investment is being eroded,” said Ham Jin-kyu, a Liberty Korea Party lawmaker. “Yet the government, without apologizing for the poor performance and the acceleration of when the pension fund will run dry, is only mulling raising the age at which people can start receiving the pension.”

BY LEE ESTHER [lee.hojeong@joongang.co.kr]