[Opening the Notebook] The National Pension Folded Its Principles for a “Good Market” (2026.08.03.)

(The Pension Future Forum

would like to give high marks to

JoongAng Ilbo reporter Lee Esther’s

principled column

on the recent management of the National Pension Fund.

Pension Future Forum, August 3, 2026)

“If we give up this good market because of a threshold, we could look like fools.” That was the answer Kim Sung-joo, Chairman of the National Pension Service, gave in June to a question about the controversy over expanding the domestic equity allocation. Little more than a month later, those words have come back bitterly.

As the KOSPI, which had soared on the back of semiconductor stocks, plunged, the valuation of the National Pension’s domestic equities also shrank in an instant.

That the allocation grew because the share prices of Samsung Electronics, SK Hynix and others surged, even though the National Pension bought no additional domestic equities, is only natural.

The problem is what came next. Until now the National Pension had steadily lowered its domestic equity allocation, taking account of the shock to the domestic market and of risk diversification. Rebalancing — selling shares to return to the original asset allocation when the target allocation is exceeded — was part of that principle.

This year, however, was different.

In January it deferred domestic equity rebalancing until the end of June, and in May it abruptly lifted the target allocation from 14.9% to 20.8%. It also widened the permitted range of strategic asset allocation (SAA), which allows further deviation from the target, and yet concealed the figures. As it happens, rebalancing was deferred until the end of June — after the local elections had been held.

Having changed, at a time when the market was overheated, the principle of reducing the domestic equity allocation, and having withheld even the grounds for that judgment, it can hardly escape the suspicion that the pension fund was mobilized to prop up the stock market.

Only two months ago the President and the government were vying with each other to stress the effect that the market’s rise had had on pension finances. That was when share prices were surging.

President Lee Jae-myung described the surge in share prices as “the normalization of stock valuations” and invoked it as a means of “painless pension reform,” while the Ministry of Health and Welfare boasted that, thanks to last year’s investment returns, the point of fund depletion had been pushed back.

A considerable part of the increase produced by rising share prices, however, is no more than a valuation gain until it is sold and locked in. When share prices turned, the profit on the books also shrank quickly. That is why a temporary stock market boom must not be held up as though it were an alternative to structural reform of the pension.

Enjoying a good market is the duty of those who manage the fund. Yet even while chasing returns, they must safeguard the fund’s stability. That is why an asset allocation principle is established in advance — so that the fund is not shaken when market forecasts go astray or political demands press in.

This is not to say that the timing and volume of trades in individual stocks should be disclosed. But why the domestic equity limit was raised so sharply, and what long-term analysis of returns and risk was carried out, must be explained to the public.

Disclosing the minutes only after four years, keeping a secrecy label on the key figures, and stressing nothing but the “good market” will not win trust. Enjoying a good market and being intoxicated by one are different things. What the National Pension must protect is not today’s KOSPI but the public’s old age.

Lee Esther, Policy and Society Desk

https://n.news.naver.com/article/025/0003541837?sid=110