“Even retirement savings put up as a stake”... Opposition slams expansion of National Pension Service’s domestic stock holdings

[Financial News] The People Power Party on the 28th claimed that the value of stocks held by the National Pension Service had fallen by 182 trillion won in three and a half months, and called for those responsible to be held accountable for the government’s decision to increase the domestic stock allocation. It also called for structural reform, warning that delayed pension reform could lead to large-scale social conflict, as in France.
Park Su-young, a People Power Party lawmaker on the National Assembly Planning and Finance Committee, held a press conference that day with the civic group Pension Reform Youth Action at the National Assembly Communication Center to denounce the expansion of the National Pension Service’s domestic stock allocation.
Park said, “From introducing single-stock leveraged ETFs for ‘Samsung-Hynix’ to increasing the pension fund’s domestic stock allocation, the Lee Jae Myung administration put even the public’s retirement savings at stake, putting political calculations first. In January this year, it deferred rebalancing so stocks that should have been sold could not be sold, and in May raised the target allocation to domestic stocks to as much as 20.8%. It mobilized the public’s retirement savings to boost stock prices for the local elections.”
He criticized the government, saying, “The value of the National Pension Service’s stock holdings evaporated by 182 trillion won in just three and a half months. It’s an unprecedented loss,” and added, “When the KOSPI rose, they congratulated themselves, calling it an ‘achievement of the administration.’ But when 182 trillion won evaporated, they hid behind the claim that it ‘should be assessed based on long-term performance.’”
The previous day, Health and Welfare Minister Jeong Eun-kyeong responded to criticism over the 182 trillion won decline during a comprehensive audit by the National Assembly Health and Welfare Committee, saying it reflected only differences in stock valuations depending on when they were assessed, and did not represent realized investment losses.
In response, Park countered that investment performance had been assessed using quarterly valuations, saying, “We publish valuations every quarter, and we talk about losses based on those valuations.” He added, “That’s how it’s always been done, so suddenly saying this time that we should talk about the value only when it is realized later, rather than using the valuation, makes no sense.”
Park also took issue with the decision to keep confidential until 2030 the minutes of the National Pension Fund Management Committee meeting at which it decided to defer rebalancing domestic stocks (adjusting the asset allocation). He called for the facts about the decision-making process to be established through a parliamentary investigation or a special prosecutor’s investigation.
He also argued that the share of investments in domestic stocks should be reduced. The National Pension Service’s domestic stock allocation, he said, should be lowered in view of the Korean stock market’s share of the global market.
Park said, “We had been gradually reducing the share invested in domestic stocks, but this time we increased it sharply. It’s a very misguided policy. The consensus was to reduce it in line with the Korean market’s 3% share of global stock markets, or, even if we couldn’t get it down that far, to around 5%.” He also raised concerns that domestic stock investment could boost share prices and generate political benefits, encouraging further investment.
The need for structural pension reform, including the introduction of an automatic adjustment mechanism, was also raised at the press conference that day. They argued that a mechanism should be introduced to automatically adjust contribution rates and income replacement rates based on factors such as fund returns, life expectancy, and changes in the numbers of pension contributors and beneficiaries.
Min Dong-hwan, co-chair of Pension Reform Youth Action, referred to protests against pension reform in France and said that social opposition could grow the longer reform was delayed. He expressed concern, saying, “I think that situation could happen in Korea, too.”
Park also said, “Pension reform needs to be tackled early,” adding, “If you try to address it after the system has grown so large, a failure like France’s will happen.”
[email protected] Kim Hyeong-gu Reporter