[Kim Tae-il's Good Government Series] What the National Pension Should Look Like in the Era of a 1,500-Trillion-Won Reserve Fund (January 29, 2026)

(The Pension Future Forum wishes to note its highly cautious position on the following two points. The first concerns the claim that improved fund investment returns have delayed the point of fund depletion. This claim must be evaluated from a perspective spanning the ultra-long-term horizon of 70 years before any conclusion can be drawn regarding whether higher fund investment returns actually extend the timeline to depletion.

The question of injecting government funds must likewise be handled with great care. Regardless of one's position on such an injection, if government funds are to be introduced, they must be structured in a manner that equalizes the benefit-to-contribution ratio for contributors across all generations — as argued in Professor Lee Kyung-woo's column in the MK Economist, referenced above. This is to say that government fund injection must not be designed in a way that entrenches the vested interests of the so-called "586 generation.")

Thanks to the high investment returns achieved by the National Pension Fund, the projected date of fund depletion has been postponed considerably. The fund had originally been forecast to be exhausted by the mid-2060s.

By that point, South Korea will be a super-ultra-aged society, and sustaining benefit payments after the fund is depleted would require raising the contribution rate to as high as 30% — a burden that contributors would find difficult to accept.

Moreover, the fund is projected to shrink rapidly from the late 2040s onward, well before actual depletion. The withdrawal of such a major institutional investor would inevitably cause severe disruption in the domestic equity and bond markets.

For these reasons, pension finance specialists have argued that last year's parametric reform alone is insufficient, and that additional measures — including government fund injection — must be implemented to stabilize pension finances. A representative example is the Korea Development Institute (KDI) proposal to separate old and new pensions, as well as the so-called "31-15 proposal" supported by many ruling-party figures.

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The chairman of the National Pension Service recently announced plans to invest the National Pension Fund in public housing for younger cohorts.

Expanding public housing for the younger generation is itself an important and necessary policy objective. However, it is a matter that should constitute a government policy goal, not an objective of fund investment management.

In the early days of the National Pension, approximately half of the reserve was earmarked to finance government policy objectives. This practice was abolished after problems emerged — including low investment returns and opaque management — amid mounting criticism over why citizens' retirement savings were being appropriated at the government's discretion.

Any future investment in public housing would represent only a small portion of the total reserve. Such investments would be managed transparently and would guarantee a certain level of returns.

Unlike private pensions, the National Pension must also serve a public interest function. It may therefore be appropriate to consider investment in public housing. Even so, any such decision must follow a transparent deliberative process — not be driven by the chairman's personal initiative or government pressure. The same applies to the recent controversy over currency intervention and adjustments to the domestic and international equity allocation.

Decisions on where and how much of the fund to invest are made by the Fund Management Committee, which exists to ensure expertise and independence in fund governance.

Yet the majority of its members belong to government ministries or institutions that must remain attentive to government preferences, making it effectively impossible for the committee to operate free from government influence. Even if the committee reaches decisions through legally prescribed procedures, those decisions cannot be considered genuinely independent judgments grounded in professional expertise — and the committee's original purpose would thereby be undermined.

If this pattern of decision-making continues, the fund's investment management will ultimately be distorted and investment returns will decline, even if no immediate harm is apparent.

It is necessary to take government policy directions into account in fund investment management. Nevertheless, fidelity to the original purpose of delegating decision-making authority to the Fund Management Committee must be maintained.

Transparently disclosing what the Fund Management Committee decided and why; actively facilitating expert critique and debate on major agenda items and incorporating the resulting views —

these are the basic institutional safeguards that fund investment management must have in an era of a 1,500-trillion-won reserve fund.

https://n.news.naver.com/article/032/0003424707?sid=110