[Yoon Seok-myeong's Pension Reform Series] Why the National Pension Should Reduce Its Domestic Equity Exposure
![[Yoon Seok-myeong's Pension Reform Series] Why the National Pension Should Reduce Its Domestic Equity Exposure](/uploads/editor/2026/07/f3903dd9f8444385bb001b419898fa28-2026070201000177900008621.jpg)
Barclays, the British bank, assessed that "the National Pension functioned as an amplifier rather than a stabilizer in the domestic financial market during the first half of the year," and "indirectly triggered a large-scale outflow of foreign capital."
The bank estimated that had the National Pension adhered to its rebalancing principles and sold equities, it would have recorded net sales of approximately 130 trillion won in domestic stocks through the end of May.
It further analyzed that had the National Pension sold 130 trillion won in domestic equities, the fund investment return would have fallen sharply to approximately 11%, rather than the recorded 22%.
Barclays projected that "if rebalancing continues to be conducted passively going forward, KOSPI overheating, foreign capital outflows, and won depreciation will persist."
In line with that forecast, large-scale selling of KOSPI shares by foreign investors has been occurring on nearly a daily basis, intensifying upward pressure on the won–dollar exchange rate driven by surging dollar demand.
It is assessed that the government and the ruling party's overreach—driven by a desire to claim rising KOSPI levels as a political achievement—has inadvertently produced the very outcome they were most eager to avoid: a sharp surge in the won–dollar exchange rate.
There is a further problem. The extension of the National Pension's projected fund depletion date—itself a result of financial projections incorporating unrealized paper gains—is now being invoked to deny the urgent need for structural reform of the National Pension.
Despite the urgent need for structural reform to secure the long-term sustainability of the pension system itself—rather than relying excessively on the exogenous variable of fund investment returns—the current approach amounts to little more than wishful thinking.
Since political intervention in the National Pension began, a troubling situation has emerged in which even the urgency of pension reform has been forgotten.
