NPS to divide investment oversight as assets soar

The National Pension Service plans to overhaul how it makes investment decisions, as the size of its assets continues to surge, aiming to sharpen expertise and adapt to increasingly complex global markets.

The pension fund said Thursday it is considering splitting its Investment Committee into two divisions — one overseeing public investments and the other managing private assets — to create a dual decision-making structure aimed at improving specialization and operational efficiency.

The change comes as NPS, one of the world’s largest public pension funds and Korea’s biggest institutional investor, continues a rapid expansion. Its assets surpassed 1,300 trillion won ($900 billion) last month and are projected to approach 1,400 trillion won by year-end — nearly triple the level of a decade ago.

The proposed split aims to reflect the distinct decision-making processes required for each investment category.

Public market assets such as equities and fixed income demand swift market assessments and agile responses, while private alternative investments, including real estate, infrastructure and private equity, require long-term strategies and specialized expertise in each field.

At the same time, NPS is also reviewing its overall asset management framework to refine strategies aimed at boosting efficiency and profitability. Starting later this year, the fund plans to engage professional consultants to assess its portfolio composition and long-term investment plans.

The pension fund has also been implementing broader changes to strengthen its investment discipline, adopting a “reference portfolio” system this year that allocates about 65 percent of assets to higher-risk investments, while increasing exposure to global markets to improve returns and diversify risk.

As of August, the NPS managed 1,322 trillion won in total assets, with 83.3 percent invested in public markets and 16.2 percent in alternative assets.

Among public investments, overseas equities accounted for the largest share at 36.8 percent, followed by domestic fixed income at 24.6 percent, domestic equities at 14.8 percent and overseas fixed income at 7.1 percent. In private markets, private equity made up 7.33 percent, real estate 4.72 percent and infrastructure 4.14 percent.

The fund’s profitability is on track to set a new record this year, with a tentative annual return of 8.22 percent as of August, surpassing its historical average of 6.82 percent.