National Pension Service Achieves 9.58% Investment Return Last Year... Highest Ever Performance Bonus for Fund Managers

Minister of Health and Welfare Kwon Deok-cheol is attending the 'National Pension Fund Management Committee' held at the Plaza Hotel in Jung-gu, Seoul on the 2nd. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Park Jihwan] The National Pension Fund's financial sector operation return rate for last year was confirmed at 9.58%. This figure exceeds the benchmark return rate by 0.99 percentage points. Reflecting this performance, the bonus payment rate for the National Pension Fund Management Headquarters was decided at 86.7% of the base salary, marking the highest level ever.

On the morning of the 2nd, the National Pension Fund Management Committee held its 7th meeting of the year at The Plaza Hotel in Jung-gu, Seoul, where it reviewed and approved the 2020 National Pension Fund operation performance evaluation, the 2020 bonus payment rate for the National Pension Fund Management Headquarters, and the 2021 National Pension Fund operation plan amendment.

The National Pension Fund's financial sector operation return rate for last year was confirmed at 9.58%, exceeding the benchmark (8.59%) by 0.99 percentage points. This is the second-highest return in the past 10 years, following 2019. The fund operation income last year amounted to 72.1 trillion KRW, approximately 1.4 times the National Pension insurance premium income (51.2 trillion KRW) and about 2.8 times the pension benefit payments (25.6 trillion KRW) for the same year.

The average annual return rate over the past three years was 6.54%, surpassing the benchmark return rate (6.29%) by 0.25 percentage points. The five-year average annual return rate was 6.31%, exceeding the benchmark (6.02%) by 0.3 percentage points.

Reflecting this fund operation performance, the bonus payment rate for the National Pension Fund Management Headquarters last year was confirmed at 86.7% of the base salary, the highest ever. According to the performance reward guidelines, 76% of the 86.7% bonus payment rate will be paid this year, with the remaining 10.7% paid next year.

The Fund Committee also received a report on last year's fund operation performance evaluation tasks and finalized this year's policy recommendation tasks to enhance National Pension performance. The policy recommendations include improving the National Pension Fund's Environmental, Social, and Governance (ESG) evaluation system, alternative investment delegated management, and operational cost management capabilities. Specifically, these involve plans to improve and utilize the ESG evaluation system of the National Pension Fund, enhance the post-management system for alternative investment delegated management, and strengthen operational cost management capabilities. The National Pension plans to carry out these policy recommendation tasks this year and reflect the evaluation results in future fund operations.

Minister Kwon Deok-cheol of the Ministry of Health and Welfare emphasized in his opening remarks at the Fund Committee meeting that "despite the high uncertainty caused by COVID-19 last year, the National Pension made efforts in risk management and return enhancement, achieving the second-highest fund operation return rate in the past 10 years, following 2019."

It is reported that the report on the guidebook concerning the composition and operation of the boards of directors of companies invested in by the National Pension Fund was not presented at the Fund Committee meeting due to protests by disability organizations. This guidebook includes policies such as the 'succession policy for CEOs' of companies invested in by the National Pension. Although it is a recommendation, companies are resisting because they believe the National Pension is likely to intervene in management immediately if companies do not follow these general principles.

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