SEOUL, KOREA - The National Pension Service proposed its target annual average returns at 5.8 percent for the next five years between 2015 and 2019. This is 0.3 percentage point lower than that announced last year. According to the plan, the pension fund's investment portion in bonds would be lowered in reflection of the current low bond yields.

 

The Ministry of Health and Welfare said on May 23 that the national pension fund operation commission held a second meeting recently and decided the proposals. According to the plan, the target annual returns would be 5.8 percent in consideration of the factors such as economic growth rate and consumer price inflation. In order to achieve the target, the National Pension Service would run a portfolio consisting of more than 35 percent in stocks, less than 55 percent in bonds, with more than 10 percent in other alternative investments such as real estate assets, infrastructure funds, and private equity funds.

 

Earlier last year, the National Pension Service had set the portfolio of more than 30 percent in stocks and less than 60 percent in bonds. The actual ratios were 30.1 percent and 60.4 percent, respectively, with the share of alternative investments accounting for 9.5 percent.

 

A Ministry of Health and Welfare official said, "As part of the investment diversification strategy, the portion of overseas stocks and alternative investments will be consistently enlarged." The share of overseas stocks will be increased to more than 15 percent for the next five years from the current 10.4 percent (44.4 trillion won).