First Meeting of the National Pension Fund New Framework Task Force Held

- Initiates a review of fund management improvements in light of the fund’s growth and a changing environment -

The Ministry of Health and Welfare (MOHW, Minister Jeong Eun Kyeong) convened the kickoff meeting of the National Pension Fund New Framework Task Force on Thursday, February 5, at 2 p.m. at the Government Complex Sejong, with relevant ministries and institutions in attendance.

The Task Force is led by the MOHW (Head: Director General for Social Welfare Policy) and includes officials from the Ministry of Economy and Finance, the National Pension Service Investment Management, the National Pension Research Institute, and the Bank of Korea. In addition, an external advisory panel will be established to support its work.

At the meeting, participants exchanged views on the Task Force’s operational structure and key agenda items. The Task Force plans to conduct a comprehensive analysis of the interaction between the National Pension Fund’s management and the domestic capital market, the foreign exchange market, and the broader macroeconomic environment, and to identify improvement measures related to asset allocation and fund management practices.

In particular, in light of the Fund’s continued growth, the Task Force agreed to review and discuss the following areas: a comprehensive reassessment of the National Pension Fund’s current foreign exchange hedging policy―which currently operates on an “open currency position” principle―including the determination of appropriate hedging levels; measures to diversify foreign exchange funding sources; and the development of a currency-neutral performance evaluation and compensation framework. The Task Force will operate on an ongoing basis until the new framework is finalized. Its discussions will be advanced expeditiously to develop improvement measures, which will then be submitted to the National Pension Fund Management Committee for deliberation and approval.

Jin Young-ju, Head of the Task Force and Director General for Social Welfare Policy at the MOHW, stated, “Following the pension reform implemented in April last year, the National Pension Fund is projected to grow to as much as KRW 3,659 trillion. In addition, record-level investment returns over the past three consecutive years have increased the Fund’s size to approximately 50 percent of GDP. While this growth has strengthened the stability of retirement income security for the public, it has also heightened the interaction between the Fund’s management, domestic markets, and the macroeconomy, making careful consideration all the more necessary.”

She further emphasized, “We will remain firmly focused on enhancing fund performance as our core objective, while simultaneously developing timely improvement measures based on rigorous analysis to ensure that the Fund’s operations do not exert excessive influence on domestic financial and foreign exchange markets.”

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