Pension Funds' Fund Management Returns Show Signs of Slowing Down

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The major pension funds, which showed a full-fledged recovery from the second half of the year after overcoming the shock of the spread of the novel coronavirus infection (COVID-19) at the beginning of the year, have recently shown signs of stagnation in their returns.

According to the financial investment industry on the 4th, the fund management return of the Private School Teachers' Pension Fund until September this year was 5.67%. It had a poor performance with a return of -0.65% until April, but rose to 2.64% in May, 2.49% in June, 5.44% in July, and 6.71% in August, before slightly declining in September.

The Government Employees Pension Fund also saw its cumulative return for September drop by 0.3 percentage points to 4.1% compared to the previous month. Until May, it was the only major pension fund to show a negative return of -0.3%, but it achieved a positive return of 0.5% in June. After that, it showed an expanding return trend of 3.0% in July and 4.1% in August, but the upward trend weakened in September.

In the case of the National Pension Service, the overall fund return as of the end of August was 5.07%. It started at 0.60% in January this year, but due to the spread of COVID-19, it continuously recorded negative returns of -0.45% in February, -6.08% in March, and -2.57% in April. After successfully turning positive at 0.37% at the end of May, it has maintained an upward trend. The National Pension Service's fund management return for September is currently undisclosed.

The recent stagnation in pension funds' returns is interpreted as being influenced by adjustments in domestic and international stock markets from mid-September due to uncertainties surrounding the US presidential election and sluggish global economic recovery.

Currently, pension funds are expected to strive to maintain returns in the 4-5% range until the end of the year. However, it is anticipated that defending returns will not be easy due to expanded uncertainties related to the US presidential election and the possibility of a second wave of COVID-19 resurgence. The securities industry expects that the complete resolution of uncertainties regarding the US presidential election will take at least more than a month.

A pension fund official stated, "If a refusal incident occurs with President Trump in the US presidential election, the volatility of domestic and international stock markets could significantly increase, and global lockdown movements due to the COVID-19 situation will also be a variable," adding, "There are so many variables that even defending the current level of returns is not an easy situation."

This content was produced with the assistance of AI translation services.