NPS eyes corporate pension oversight, stirring competition concerns (2026.07.30)

(The National Pension Service should

stop nosing about in other financial markets, and,

as the party responsible — amid the great controversy of the moment —

for managing the public’s retirement money,

should uphold the most

basic operating principle of all,

political independence, and

prepare, first of all, the measures

that would make such operation possible.

That looks urgent!

Moreover, the providers of retirement pensions,

which have been run so pitifully until now,

can hardly escape severe criticism!

It is because they have run retirement pensions

so wretchedly all this while

that the National Pension can raise a pretext for intervening in their management!

In particular,

as could be witnessed

in the public pension reform debate,

the fact that experts who were deeply involved

in the process by which our retirement pensions

came to this pass

show not the slightest reflection

on their own faults

is likewise

something that does not look normal!

Pension Future Forum, August 1, 2026)

(The Korea Herald English article below has been

translated with Google and set alongside it.)

State pension fund’s OCIO push raises fears of market distortion and weaker foreign investor interest

[The state pension fund’s push into OCIO (outsourced investment management) has raised concerns about market distortion and weakening interest from foreign investors.]

South Korea’s National Pension Service is seeking to serve as an outsourced chief investment officer, or OCIO, for corporate retirement pension funds, raising concerns that its entry could distort competition and expand state influence over private-sector capital.

An OCIO oversees a pension fund’s investment strategy, selects and monitors asset managers and manages risks on behalf of the fund.

As the National Pension Service of Korea seeks to provide outsourced investment management (OCIO) services for corporate retirement pension funds, concerns are being raised that this move could distort market competition and expand the state’s influence over private capital.

An OCIO establishes investment strategy on behalf of a pension fund, selects and supervises asset managers, and manages risk.

According to financial industry sources on Thursday, the NPS submitted a proposal titled “Plan for Public Pension Fund Participation” to the government’s working-level task force on fund-based retirement pensions last month.

The fund-based retirement pension system, expected to launch in the first half of next year, would pool retirement assets from participating companies into funds managed by professional institutions. The system operates through a three-tier structure consisting of a trustee, an OCIO and sub-asset managers.

According to financial industry sources on Thursday, the National Pension Service (NPS) submitted a proposal titled “Plan for Public Pension Fund Participation” to the government’s working-level task force (TF) on fund-based retirement pensions last month.

The fund-based retirement pension system, scheduled for introduction in the first half of next year, consolidates the retirement pension assets of participating companies into a single fund to be managed by professional institutions. The system operates through a three-tier structure consisting of a trustee, an OCIO (outsourced chief investment officer) and sub-asset managers.

Under its proposal, the NPS is seeking to serve as a trustee for the retirement pensions of public institution employees while taking on an OCIO role for funds established by private companies.

The NPS said it would only serve as an OCIO when requested by a trustee. However, market participants view the move as a de facto entry into the OCIO market.

Critics argue that the NPS’ participation could distort competition, given its dominant position in the domestic asset management industry. Major asset managers already manage trillions of won in assets entrusted by the NPS, making it difficult for private firms to compete with the pension giant on equal terms.

Through this proposal, the National Pension Service (NPS) is seeking to act as trustee for the retirement pensions of public institution employees while also taking on the OCIO (outsourced investment management) role for funds established by private companies.

The National Pension’s position is that it would perform OCIO duties only when requested by a trustee, but market participants take this move as a de facto entry into the OCIO market.

Some point out that, given the National Pension’s overwhelming position in the domestic asset management industry, its participation in the market could distort the competitive structure. With major asset managers already managing trillions of won entrusted to them by the National Pension, it is difficult for private firms to compete on equal terms with this giant pension fund.

“In the public pension market, the NPS is the referee and private asset managers are the players,” a senior official at an asset management firm said. “If the NPS becomes a player itself in the private market, who can evaluate it objectively?”

Another industry official described the NPS as the most powerful client in the domestic asset management industry, saying private firms would be reluctant to compete against an institution that decides the allocation of large-scale pension assets.

Under the current Financial Investment Business and Capital Markets Act, only asset management firms are allowed to provide OCIO services. The NPS has reportedly proposed allowing it to perform OCIO functions under certain conditions, such as when requested by a trustee.

A senior official at one asset management firm asked rhetorically, “In the public pension market the National Pension Service (NPS) is the referee and private asset managers are the players,” and “if the National Pension itself plays as a player in the private market, who could evaluate it objectively?”

Another industry official named the National Pension as the most influential client in the domestic asset management industry, explaining that private managers would be reluctant to compete with an institution that decides the allocation of vast pension assets.

Under the current Financial Investment Services and Capital Markets Act, only asset management firms may provide OCIO (outsourced investment management) services. The National Pension is reported to have proposed that it be permitted to perform OCIO functions itself under certain conditions, such as when requested by a trustee.

Industry officials also questioned whether the NPS’ investment model is suitable for fund-based retirement pensions, which follow a defined contribution structure.

Unlike the NPS, which can pursue long-term asset allocation strategies based on relatively predictable pension payments, DC-type retirement pensions require more active management as assets move with job changes and retirement decisions.

“The NPS currently outsources 51 percent of its assets to external managers, showing that it lacks sufficient capacity to manage even its existing pension assets entirely on its own,” said Sung Joo-ho, a professor at Kyung Hee University’s School of Management and former president of the Korean Pension Society.

Industry officials also questioned whether the National Pension’s (NPS) investment model is suitable for fund-based retirement pensions, which follow a defined contribution (DC) structure.

Unlike the National Pension, which can pursue long-term asset allocation strategies on the basis of relatively predictable pension payments, DC-type retirement pensions require more active management, since assets move with job changes and retirement decisions.

Sung Joo-ho, Professor at the School of Management of Kyung Hee University and a former president of the Korean Pension Association, said, “The National Pension currently outsources 51% of its assets to external managers, which shows that it lacks the capacity to manage even its existing pension assets entirely on its own.”

"Taking on OCIO responsibilities for DC-type retirement pensions, which require more personnel and management capabilities, is difficult to understand,” he said.

Industry officials said their biggest concern is that an expanded role for the NPS could extend its influence beyond shareholder voting rights and into corporate funding decisions.

The NPS is already a major shareholder in many listed companies, and critics warn that concentrating corporate retirement pension assets under the pension fund could increase companies’ sensitivity to the NPS’ views and deepen concerns over state-led finance.

The professor said, “Taking on even the OCIO (outsourced investment management) duties for defined contribution (DC) retirement pensions, which demand more personnel and management capacity, is hard to understand.”

Industry officials say their greatest concern is that, if the National Pension’s role expands, its influence could extend beyond the mere exercise of shareholder voting rights to companies’ funding decisions.

The National Pension is already established as a major shareholder in numerous listed companies. Critics warn that if corporate retirement pension assets are concentrated in the National Pension, companies may become excessively conscious of the National Pension’s position, and that concerns over “state-directed finance” could also deepen.

“If companies that already have the NPS as a major shareholder also entrust their retirement pension assets to the NPS, they may inevitably become more cautious about the pension fund’s stance,” a financial investment industry official said.

“Foreign investors place great importance on market autonomy and predictability. If the market is perceived as one where the government influences both corporate governance and capital flows, it could weaken the appeal of South Korea’s market for long-term investment,” he added.

A financial investment industry official said, “If companies that already have the National Pension as a major shareholder also entrust their retirement pension assets to the National Pension, those companies will have no choice but to be more conscious of, and more careful about, the pension fund’s stance.”

The official went on to say, “Foreign investors place a very high value on market autonomy and predictability,” adding, “If the market comes to be perceived as one in which the government exerts influence over both corporate governance and capital flows, the appeal of the Korean market as a long-term investment destination could decline.”

https://n.news.naver.com/article/044/0000287633?type=journalists