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National Pension System Distinguishing Itself with High Return on Assets
Pension Fund
National Pension System Distinguishing Itself with High Return on Assets
  • By matthew
  • March 10, 2014, 08:52
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It has been found that the five-year return on assets of the National Pension System (NPS) is the second-highest among the public pension funds of OECD member countries. 

NPS Junior Research Analyst Roh Sang-yoon said on March 9 that the NPS recorded an annual average return of 5.9 percent between 2008 and 2012, to rank second among the 11 countries surveyed. The Instituto Mexicano del Seguro Social (IMSS) topped the list with an average rate of 6.0 percent, followed by the Future Fund of Australia (5.0 percent), the Social Security Trust Fund (SSTF) of the United States (4.6 percent) and Government Pension Fund Norway (GPF-N, 4.4 percent)

In addition, the NPS ranked fifth, following its counterparts in the US, Japan, Norway, and Saudi Arabia in terms of asset size as of the end of 2012. 

In the meantime, the NPS has recently decided to hold hands with Samsung Asset Management and Korea Investment Management for its overseas stock management. The decision made by the NPS, which has a great influence worldwide as a management company handling 420 trillion won (US$393 billion) of assets, is expected to be a great boon for Korean asset managers’ overseas market penetration. 

The NPS announced on March 7 that it selected two companies for its investment in A-shares in mainland China. Both Samsung Asset Management and Korea Investment Management are running local subsidiaries in Hong Kong. Cephei Capital and Fullgoal Fund Management join the operation as the management firms covering Hong Kong and mainland China, as well. 

The QFII ceiling that the NPS has been granted from the Chinese government is US$300 million, and the NPS has already invested one-third of it in Chinese bonds. The rest are going to be allocated to the four management firms, and the funds are planned to be executed before late May this year. 

As of the end of November last year, the NPS invested 8 trillion won (US$7.5 billion) in overseas assets. The amount is divided into 4.3 trillion won (US$4.03 billion) in overseas stocks, 1.8 trillion won (US$1.68 billion) in foreign bonds and 1.8 trillion won in alternative assets abroad.