South Korea pension fund seeks higher dividends from local firms

[SEOUL] South Korea's National Pension Service (NPS) will ask domestic firms for higher dividends this year, after these firms' contribution to its 2015 returns was one of the lowest, the health ministry which oversees the world's third largest pension fund said on Wednesday.

The NPS, which had 512 trillion won (S$582.34 billion) in assets under management in December, reported preliminary returns of 4.6 per cent on its 2015 investments, according to a statement by the ministry.

Returns from domestic stock holdings and overseas bond holdings accounted for 1.7 per cent and 1.5 per cent respectively of the total, the lowest contribution.

NPS saw higher return rates from alternative investments such as real estate, gaining 9 per cent returns from domestic alternative assets, and 14.9 per cent from overseas alternative investments.

About 10.7 per cent of NPS' assets were invested in local and overseas alternative investments in 2015, compared to 18.5 per cent in domestic stocks and 52.5 per cent in domestic bonds.

To bolster returns from domestic stock holdings, the pension fund's investment office began discussing in February dividend policies with local companies they own a stake in, to encourage higher payouts from stragglers that have yet to respond to government pressure to lift dividends last year.

The NPS, which appointed a new chief investment officer last month, said previously it wants to increase its overseas and alternative investment holdings to 35 per cent of all assets by 2020.

REUTERS