NPS to lift stock holdings to 55% by 2030, raising risk appetite

The National Pension Service (NPS) plans to raise its equity allocation to about 55% of its assets by 2030 from 40.4% as of the end of February, South Korea’s welfare ministry said on Thursday, as it increases its risk appetite to more actively deploy capital in line with rapid asset growth.

The mid-term portfolio adjustment plan was released following the NPS’ adoption of a new benchmark portfolio framework this year.

Under the new reference portfolio, the South Korean pension scheme is allowed to lift the allocation of higher-risk investments to as much as 65% of assets under management (AUM), regardless of asset class, as long as they meet preset risk-return criteria.

The Ministry of Health and Welfare, which oversees the NPS, said that the world’s third-largest pension scheme will bump up its exposure to both domestic and overseas stocks to 14.4% and 38.9%, respectively, by 2030.

As of the end of February, domestic and overseas stocks accounted for 12.5% and 35.4% of its portfolio.

The 2026-2030 allocation targets were approved by a committee of the National Pension Service Investment Management led by Welfare Minister Cho Kyoo-hong. The committee reviews the NPS’ asset allocation guidelines.

Alternative assets will likely remain little changed at 15% from 16.8% as of the end of February.

By contrast, the pension fund will cut its proportion of bonds to 30% by 2030 from 35% as of the end of February.

For domestic bonds, it plans to reduce exposure to 23.7% by 2030 from the current 27.9%.

Over the next five years, overseas bond holdings are expected to remain steady at around 8% of its AUM.

Currently, it entrusts 42.8% of its overseas bond portfolio to external managers. By 2030, it plans to reduce the ratio to as low as 30% to expand in-house management.

In 2026, the NPS is expected to deploy an additional 130.97 trillion won ($95.3 billion) into assets out of 184.92 trillion won in projected contributions and investment income.

Its AUM stood at 1,227.5 trillion won as of the end of February.

Write to Yeonhee Kim at yhkim@hankyung.com
 

Jennifer Nicholson-Breen edited this article.