National Pension Service is not tool for propping up stock market

The author is an editorial writer at the JoongAng Ilbo
The government has decided to sharply increase stock investments by the National Pension Service (NPS), which manages the retirement savings of the Korean public. The decision was approved on Thursday by the National Pension Fund Management Committee. At that meeting, the committee raised the target allocation for domestic equities to 20.8 percent from 14.4 percent, a dramatic increase.

The move itself was not entirely unexpected. What raised greater concern was the committee's decision to give the NPS more flexibility to exceed the target. It significantly expanded the allowable range for so-called strategic asset allocation, enabling the fund to purchase more domestic stocks in the short term.
Previously, the range was set at 5 percentage points. This time, however, the committee declined to disclose the revised figure, arguing that doing so could affect the fair execution of fund management and disrupt financial market stability. That explanation is difficult to accept. If disclosure threatens market stability today, why was the figure publicly available in the past?
Many market participants believe the range has been widened to around 10 percentage points. If that estimate is correct, the NPS could raise its domestic equity allocation to more than 30 percent. As of the end of March 2026, the fund held more than 320 trillion won ($221 billion) in domestic stocks. The new framework could allow holdings to increase by more than 100 trillion won.
Investors are understandably pleased. More buying by the NPS could provide additional support for stock prices. Yet from the perspective of retirement security, the decision raises legitimate concerns. Health and Welfare Minister Jeong Eun-kyeong, who chairs the committee, said the measure would improve both profitability and stability while taking financial market conditions into account. Critics, however, question whether the pension fund is being used to support the stock market.
The long-term consequences are impossible to predict. No one knows whether Korean stocks will continue rising or eventually decline. If prices keep climbing, the pension fund will benefit. If markets fall after the NPS expands its exposure, losses will ultimately be borne by the public whose retirement savings the fund manages.
Recent performance may encourage optimism. The NPS earned strong returns from domestic equities last year and in the first quarter of this year. But high returns are never guaranteed. High risk and high reward are inseparable.
The fund's own history illustrates the point. Between 2011 and 2025, the NPS did not produce gains every year. It recorded losses roughly once every three years. Three of those years saw double-digit negative returns: minus 10.34 percent in 2011, minus 16.77 percent in 2018 and minus 22.76 percent in 2022. Even the best baseball hitter cannot avoid occasional strikeouts. Investment performance follows a similar pattern.
Another troubling aspect of the decision is the lack of transparency. The committee has not disclosed the basis for expanding domestic stock investment, nor has it revealed what arguments were exchanged during the Thursday meeting. That prompted the Pension Research Society, a group of pension experts, to question whether the decision was based on long-term analysis of returns and risks or was simply an improvised response to immediate market pressures.

The meeting minutes will not be released until late May 2030 under the National Pension Act. By then, the current administration will be nearing the end of its term. In practice, the public will have to wait for years before learning how such an important decision was made.
The contrast with the Bank of Korea is striking. The central bank typically publishes minutes of Monetary Policy Board meetings within about 20 days and explains policy decisions through press conferences held by the governor. The pension fund committee does neither...