Kim Sung-joo, chairman of South Korea’s National Pension Service (NPS), apologised to lawmakers on 27 October after suggesting at a parliamentary audit that they were asking questions without a firm grasp of the fund’s domestic stock holdings. Answering Rep. So Byung-hoon of the Democratic Party of Korea at the National Assembly’s Health and Welfare Committee, Kim said the fund invests in more than 80 countries and that “overseas investments account for more than 55% of the fund”, Seoul Economic Daily reported in its English edition. Kim added that “domestic equities are currently delivering the best returns”.
People Power Party lawmakers protested. Rep. Han Ji-a called the remarks “deeply insulting”, shouting broke out and the audit was temporarily suspended. When it resumed, Kim said: “I apologize for using wording that could be misunderstood.” The parties also clashed over the minutes of the National Pension Fund Management Committee meeting that deferred rebalancing of domestic equity holdings. The People Power Party demanded disclosure; the ruling party said the National Pension Act allows release only after four years.
A rebalancing rule set aside
The dispute dates from January, when the committee raised the target weight for domestic stocks from 14.4% to 14.9% and deferred rebalancing until the end of June. In May it raised the target to 20.8% and widened the permitted band. The actual share of domestic equities reached 29.1% by the end of June, Korea JoongAng Daily reported. Rebalancing resumed in July.
Then the market turned. The KOSPI fell 39.06% from a record close of 9,114.55 on 22 June to 5,554.22 on 15 October, Money Today reported. The value of the NPS’s stakes in 287 listed companies where it holds at least 5% fell by 182.4 trillion won from the end of June to 333.53 trillion won, according to FnGuide data cited by JoongAng Daily, with Samsung Electronics and SK hynix accounting for 71.8% of the drop. Money Today noted that the fall in valuation reflects lower share prices and does not mean losses have been finalised. At an earlier session on 14 October, Kim argued that sticking to the rules in January would have meant selling “more than 800 billion won worth of stocks every day”.
The governance test for state-sponsored funds
For other public funds, the episode shows how home bias becomes a governance problem. The Korea Times said in an editorial that the changes followed remarks by President Lee Jae Myung suggesting the fund’s domestic allocation was too low, and argued that the NPS “is not a government instrument for propping up stock prices”. The fund also grew more dependent on a handful of stocks: Samsung Electronics and SK hynix made up 55.7% of its domestic equity assets by 6 July, up from 40.4% at the end of March, according to JoongAng Daily. Sealed minutes make it harder for members and markets to judge whether such decisions were taken on investment grounds.
The currency adds a second dimension to the domestic-versus-global choice. The NPS’s overseas assets were about 827 trillion won at the end of January. In April, after the won weakened into the 1,530-per-dollar range, the fund raised its strategic currency-hedging ratio for overseas assets to 15%, the Asia Business Daily reported. The Korea Herald calls the NPS the world’s third-largest pension fund by total assets; Money Today put its reserves at more than 1,684 trillion won at the end of July. A fund of that size is likely to move both the stock market and the won when it shifts between Korean and foreign assets.
Kim’s defence has some support. The fund returned 14.84% from January to July, while its domestic bonds returned -3.36%, Money Today reported, and some in the industry doubt that selling Korean stocks would have preserved returns. Those figures predate the mid-October falls, so the full-year picture remains open.
What to watch
- Whether the minutes are released early; the Korea Times reported that they are being withheld until 2030.
- The People Power Party’s demand for a national investigation into the target-weight changes.
- The NPS’s return disclosures for the months that include the October sell-off.
- Whether the committee holds this year’s 20.8% domestic equity target or revises it.
Sources
- Pension Fund Chief Apologizes After Saying Lawmakers Misread Stock Holdings, Seoul Economic Daily, 27 October 2026
- Kim Sung-ju defends rebalancing deferral via social media after national audit… meeting minutes remain non-public, Money Today, 30 October 2026
- [Exclusive] National Pension Service in net selling of domestic stocks this year… Discretionary sales made before rebalancing resumed, Money Today, 26 October 2026
- Value of National Pension Service’s stock holdings plunges as market tanks, Korea JoongAng Daily, 18 October 2026
- [ED] Market collapse exposes cost of policy misjudgments, The Korea Times, 18 October 2026
- Korean stock market braces for NPS rebalancing sell-off, The Korea Herald, 30 June 2026
- NPS Raises Strategic Currency Hedging Ratio to 15%... Steps In as Exchange Rate Buffer, The Asia Business Daily, 14 April 2026