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The National Pension Service.
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Gov’t projections put total investment at $30 billion by end of 2007
The nation’s three public funds - the National Pension Fund, the Government Employees Pension Fund, and the Private School Teachers Pension Fund - are expected to invest 2.6 times more than their current investment amounts on the local stock market by the end of next year. According to the Ministry of Planning and Budget on October 25, the three major pension funds will be able to invest up to 17.2 trillion won (US$18 billion) in stocks in 2007, based on their increased value and the set percentage the government allows them to invest. This projected 17.2 trillion won is an increase in investment of 162.3 percent from the 6.6 trillion won the three funds invested this year. If the funds invest the entire projected 17.2 trillion won in shares, the aggregate sum of money invested by the funds will be 28.5 trillion won by the end of next year, up 77.1 percent from this year’s 16.8 trillion won. The National Pension Fund, the biggest among the three public funds, can invest up to 15.7 trillion won, an increase of 171.6 percent from this year’s 5.8 trillion won. The fund plans to invest 11 trillion won on the domestic bourse and the remainder in overseas stocks. The fund will invest nearly six times more than this year’s amount on foreign shares. Accordingly, the aggregate sum of money invested by the National Pension Fund will be 27.3 trillion won at the end of 2007, up 80.3 percent from this year’s 15.1 trillion won.Investment by the Private School Teachers Pension Fund will increase 132.1 percent to 960 billion won from this year’s 414 billion won, while investment by the Government Employees Pension Fund will be at 550 billion won, up 50.1 percent from this year’s 367 billion won. As of the end of last year, the level of stock investment was 8.0 percent for the National Pension Fund, 12.6 percent for the Government Employees Pension Fund and 8.1 percent for the Private School Teachers’ Pension Fund. While the three pension funds’ investment in the stock market has increased every year, it is still small compared with pension funds in advanced countries, due to the government’s conservative regulation of the funds’ allowed investment. For example, in the United States, the California Public Employees’ Retirement System and the Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF) invest 62.5 percent and 78.8 percent of their assets, respectively, on the stock market.
