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NPS forecasts W25tr stock market loss

The headquarters of the state-run National Pension Service in Seoul. (Yonhap)
The headquarters of the state-run National Pension Service in Seoul. (Yonhap)



The state-run National Pension Service could lose up to 25 trillion won ($20.3 billion) from its investments in the South Korean stock market this year, local reports said on Thursday.

A asset management report compiled in late January showed that the maximum amount of potential losses of the overall financial assets stood at 40.8 trillion won as of late January, which amounts to 53.6 percent of a limit of 76.2 trillion won. The figure increased by 300 billion won from late November.

Potential loss indicates how much the NPS could lose in its investment assets, including stocks and bonds, for a year. The estimates have a confidence level of 95 percent.

By breakdown, the world’s third-largest pension fund with more than 700 trillion won in assets held 25.6 trillion won worth of shares faced with risks of principal loss, up 5.7 trillion won from 19.8 trillion won in late November. It was estimated to possibly lose up to 20.3 trillion won of foreign shares, down from 23.7 percent during the same period.

Meanwhile, the number of pension fund recipients exceeded 5 million in April for the first time since the state-run pension system was established in 1988.

The five millionth recipient is a 62-year-old female, named Myeong Jeong-hee, who paid a total of 48.2 million won for 32 years and three months since 1988. She will receive 1.2 million won monthly for the rest of her life. Considering the average lifespan for a 62-year-old woman, standing at 87.6 years, Myeong is estimated to receive 380 million won, 7.9 times the premiums she paid.

The number of valid pension fund recipients has been on an upward trend from 1 million in 2003 to 4 million in 2016. The figure, which came in at 5 million this year, is expected to increase to 7 million in 2025 with the increasing number of retiring baby boomers, according to the NPS.

In 2019, the state agency handed out a combined 21.7 trillion won worth of pension as to 4.96 million people. Female recipients made up 43.1 percent, or 2.14 million. Some 270,000 citizens received 1 million won or more while 98 received 2 million won or more.

By Kim Young-won (wone0102@heraldcorp.com)
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