National Pension Service

The National Pension Service (NPS; ) is a public pension fund in South Korea. It is the third largest in the world[1] with over $900 billion in assets, and is the largest investor in South Korea.[2] It was established in 1986 with an aim to provide financial support to Korean citizens who can no longer work due to old age, disability, or death caused by an accident. It also runs various welfare programs to help improve the overall well-being of the population.

History

The National Pension Service (NPS) of Korea was created following the promulgation of the National Pension Act in December 1986, which established the legal basis for the pension system. In September 1987, the National Pension Corporation was formed to oversee the administration and operation of the system.At the time of its founding, the National Pension Service (NPS) operated with 656 employees across 6 divisions, 15 departments, and 14 regional branches. However, as the scope of the NPS expanded, including the introduction of special old-age pension payments and the extension of coverage to rural areas, the agency's workload grew substantially. In response, the organization underwent structural specialization and staff expansion.

The national pension system was first implemented in January 1988, covering workplaces with 10 or more full-time employees. This compulsory coverage was extended in January 1992 to include workplaces with five or more full-time employees. In January 1993, the payment of Special Old-age Pension benefits commenced.

Assets

The National Pension Service mainly invests in government bonds, but also retains sizeable investments in domestic and foreign equities. As of year-end 2012, the NPS had approximately 60% domestic bonds (2% of which was in provincial or territorial bonds), 19% domestic stocks, 8% foreign stocks and 5% foreign bonds.[14] By 2016, those proportions had changed to 52% domestic bonds, 19% domestic stocks, 14% foreign stocks, and 4% foreign bonds. The NPS is a significant shareholder in 94 different listed South Korean companies, owning more than 5% of their shares, and owns at least one share of approximately 600 different companies, approximately 30% of all the listed firms in the country. Overall, the NPS invests specifically in blue chip and large market capitalization stocks, which suits their desire for stability (in well established companies) and long-term returns on investment.[15] Almost all of its investments are below the disclosure threshold of 10% to avoid mandatory disclosure when a company obtains more than 10% of a company's shares. The holdings are viewed as stable by the investment community and thus seek to sell their stake(s) in those companies to other institutional investors.[16]

Despite the fund's large size, its investment performance has faced criticism. In 2012, the NPS reported an operating return of 6.99%, and in 2013, 4.16%, which was the lowest return among the six largest pension funds in the world.[17][18] Concerns have been raised regarding the efficiency of its asset management practices. The NPS also plays an active role in corporate governance. In the first quarter of 2009, it exercised its voting rights at 348 general shareholders meeting, and voted against at least one agenda item in 84 of them (24.1%). The NPS voted against a total of 111 items out of a total 2,417 proposals, yielding a disapproval rate of 4.59%. This disapproval rate rises to 6.33%, when abstentions are included. In meetings, the NPS voted against one agenda item in 63 meetings and against two or more agenda items in 21 meetings.[19]

native name	국민연금공단
native name lang	ko
romanized name	Gukminyeongeumgongdan
type	Government-linked company Pension fund (Sovereign wealth fund)
foundation	1988
location	Deokjin District, Jeonju, South Korea
key people	Tae-Hyun Kim, chief executive officer
industry	Investment management
homepage	nps.or.kr
aum	KRW 1.227 trillion (2025)
parent	Ministry of Health and Welfare

National Pension Service

History

Solvency

Assets

External links

References