[Ha Hyeon-ok's Perspective] The "KOSPI Trap" and the "National Pension Trap" (2026.05.20.)

According to the third long-term financial projection released last September, if the National Pension's target fund investment return is raised by one percentage point above the existing level (4.5% per annum) to 5.5% per annum, the fund depletion date would be pushed back to 2073.

Under the scenario in which the return target is raised by two percentage points to 6.5%, the fund is estimated to be depleted in 2090. This suggests that the dream of "extending the life" of the National Pension through improved returns could be made a reality.

Optimism is quietly spreading. At the current pace, the National Pension appears set to record its highest return for four consecutive years. The primary contributor is domestic equities. The KOSPI surged 76% last year, while the domestic equities held by the National Pension rose 82.4% over the same period. This explains why the National Pension's three-year cumulative fund investment return (2023–25) jumped sharply to 16.05%.

Given that the KOSPI has risen approximately 74% so far this year alone, a new record return appears achievable.

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Under the applicable guidelines, the ceiling on the National Pension's domestic equity allocation for this year stands at 14.9%. Even accounting for the Strategic Asset Allocation (SAA) permissible range (±3 percentage points) to respond to market volatility and the Tactical Asset Allocation (TAA) permissible range (±2 percentage points) for generating additional returns, domestic equities may be held at a maximum of 19.9%.

However, when the Fund Management Committee (FMC) temporarily suspended the application of the SAA ceiling in January, the domestic equity allocation came to exceed the portfolio target by more than 10 percentage points.

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The National Pension buys and sells assets in accordance with the medium- to long-term asset allocation plan determined by the FMC whenever a particular asset class falls below or exceeds its target weight. This constitutes a mechanical asset rebalancing process.

Assets that have risen in price are sold to realize gains, while assets that have declined or are comparatively undervalued are purchased to enhance returns.

Under normal principles, domestic equities should have been sold once the domestic equity allocation exceeded 17.9%; however, the suspension of the SAA ceiling meant that rebalancing did not occur, and the domestic equity holding ratio expanded.

The concern centers on next month, when the suspension measure expires. There are projections that, if the National Pension proceeds with rebalancing, a "sell-off" of up to 130–165 trillion won could be unleashed.

This is the background to calls for raising the target weight of domestic equities in the "2027–31 Medium-Term Asset Allocation Plan," which is to be finalized at the FMC meeting scheduled for the 28th of this month.

However, if the National Pension holds on to equities to prevent market shocks and share prices subsequently decline, the retirement assets of the population could be placed at serious risk.

Should the National Pension become a dominant force in the domestic stock market, and domestic equities come to occupy an excessive share of the National Pension's asset portfolio, a mutually destructive outcome may ensue.

At present, pension contribution income still exceeds benefit expenditure; however, once outflows exceed inflows, equities and other assets will need to be sold to pay pension benefits.

National Pension equity sell-offs could drive down share prices, and declining prices could in turn reduce the fund investment return—a vicious cycle in which the National Pension falls into the "KOSPI trap" while the KOSPI falls into the "National Pension trap."

With respect to the National Pension's asset allocation, the priority that the FMC must place first is the long-term profitability and stability of the pension as a retirement asset belonging to the public.

Although the National Pension, pressed into service for stock market support, has managed to grow its reserves, prudent distancing is now required to avoid falling into a mutually destructive trap. The complacent attitude of "as long as it does not happen on our watch (i.e., this administration)" could bring the National Pension to ruin.

https://n.news.naver.com/article/025/0003524466?sid=110

[Ha Hyeon-ok's Perspective] The "KOSPI Trap" and the "National Pension Trap" (2026.05.20.)

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