S Korea's pension fund to keep boosting stock holdings

SOUTH KOREA'S National Pension Service plans to keep its strategy of increasing stock holdings in its total assets to boost earnings while cutting bond holdings over the coming years, the government said on Friday (May 27).

The world's third-largest pension fund now aims to boost the ratio of stocks in its total assets to around 55 per cent by the end of 2027 from 44.1 per cent targeted for the end of this year, the welfare ministry said in a statement.

In contrast, the ratio of bonds will be gradually cut to around 30 per cent over the same 5-year period from a projected 42.5 per cent, according to the statement, released after a regular review by the overseeing committee.

The amount of the pension fund's total financial assets is expected to keep growing from a projected 1,010 trillion won (S$1102.7 billion) at the end of this year, and the adjustments refer to the ratios by asset class out of the total.

South Korea's population has been ageing fast and the government has been trying to adjust investment strategies with the aim of maximising earnings so that the fund can be sustained as long as possible.

The ministry said the fund aims for an average investment return of 5.4 per cent for the 2023-2027 period, up from a projected 5.1 per cent return on average for the 2022-2026 period set at the last year's review. REUTERS