The national pension fund will invest more overseas to guarantee a profitable yet secure source of interest for subscribers, the National Pension Service said Tuesday.
Having focused on overseas bonds since its overseas investment kicked off in 2001, the NPS headquarters said it would diversify its investment portfolio. The public corporation owns several pieces of overseas real estate including the Sony Center in Berlin, the HSBC headquarters building in London’s Canary Wharf, KDX Toyosu Grandsquare in Tokyo and Aurora Place in Sydney, raking in billions of won in rent every year. Colonial Pipeline Co. is another NPS asset.
Currently, the national pension fund totals at around 340 trillion won ($310 billion) and overseas investment is taking up 12.6 percent. As the fund is expected to reach 2,465 trillion won in 2043, one of the world’s largest, the NPS is planning to raise the portion to 20 percent in the next three years. Last year the corporation saw a 10.2 percent return on investment, higher than many other giant pension funds.
NPS chairman and CEO Jun Kwang-woo said the fund will find its next generation investment targets in emerging markets, green industries and overseas bonds.
Bond investments will be split into credit and mortgage bonds, moving away from government bonds. Emerging markets and the so-called green industry such as renewable energies and natural resources development will replace the conventionally preferred developed nations’ saturated industries.
“We will lower the bond holdings to less than 60 percent by late 2016 and instead raise the stock portion to 30 percent from the current 25 percent and 10 percent in alternative investments,” Jun said.
In order to minimize any losses from fluctuating and volatile global financial markets, a special risk management manual will be formulated, officials said.
“The NPS has a moniker of ‘whale in the pond,’ for its great potential,” an NPS official said. “The NPS is more than a simple finance or welfare organization. It handles the lifetime budget for retirees who depend largely on its monthly payments. With 3 million people benefiting from the system and more than 7.1 million so-called babyboomers slated to retire in the near future, we must be fully ready to secure their finance and future.”
“We are searching for the balance among the safest and the most profitable investment tools. Currently, the overseas investment has been promising and we hope the upturn will continue.”
