The risky dream of NPS head Kim Sung-joo

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The risky dream of NPS head Kim Sung-joo

Published: 26 Dec. 2025, 00:04

Audio report: written by reporters, read by AI

Joo Jung-wan

The author is an editorial writer at the JoongAng Ilbo.

Six months after the launch of the Lee Jae Myung administration, the government has appointed a new official to oversee Koreans’ retirement savings. On Dec. 15, Kim Sung-joo, a former lawmaker from the Democratic Party, once again assumed office as chair of the National Pension Service (NPS), a role he had previously held from 2017-2020. Kim had sought the party’s nomination ahead of the April general election last year in the Jeonju B district of North Jeolla Province but lost in the primary. His rival at the time was Chung Dong-young, who now serves as unification minister.

Kim Sung-joo, chair of the National Pension Service, delivers his inaugural address at the chair’s inauguration ceremony on Dec. 17. [NATIONAL PENSION SERVICE]

From the outset, Kim’s appointment has prompted unease because of his background as a career politician. The headquarters of the NPS is located in Innovation City in Deokjin-gu, Jeonju, an area that overlaps with Kim’s former constituency. If the chairmanship were to be used to rebuild a local political base ahead of the 2028 general election, it would raise serious concerns. Political circles are already speculating that Kim may not complete his legally mandated three-year term: He resigned from the same post at the NPS in 2020 with 10 months remaining in his term before running in a general election. The head of a public institution is meant to serve the interests of the entire nation, not to use it to prepare for future campaigns.

Those worries were amplified by Kim’s inaugural address on Dec. 17, which struck many as misplaced. He described a “long-cherished dream” in which the NPS would play a role in solving Korea’s housing crisis. Kim argued that the fund should invest to support young people who have postponed marriage and newlyweds seeking stable housing, and that it should act as a financial engine for supplying homes at reasonable prices.

Taken at face value, the remarks sounded less like an address by the head of the pension fund than one by the president of the Korea Land and Housing Corp. There is no dispute that alleviating housing difficulties for young people is a legitimate policy goal. The question is where the resources should come from. That responsibility belongs to public finances. Tapping retirement savings to pursue housing policy objectives is a dangerous proposition. What may be a long-cherished dream for some could become a nightmare for many citizens.

According to the NPS’s investment headquarters, total assets under management stood at 1.36 quadrillion won (about $942 billion) as of the end of September. That figure exceeds the government’s proposed total spending for next year, 728 trillion won, by more than 600 trillion won. From a politician’s perspective, such a vast pool of money is bound to be tempting. Yet restraint is essential, especially when future generations are taken into account. Once the benefits that must eventually be paid to contributors are considered, the fund is already facing a serious shortfall.

Without more fundamental reforms, the depletion of the pension fund is unavoidable. Pension reform legislation passed in March with bipartisan support delayed the exhaustion date but failed to resolve the problem at its core. The National Assembly Budget Office projects that pension expenditures will exceed revenues starting in 2048, pushing the system into deficit, and that the fund will be fully depleted by 2065. In practical terms, this means that someone born in 2000 could reach the eligible age of 65 to receive old-age benefits only to find the fund virtually empty.

To slow the pace of depletion, improving the fund’s investment returns is crucial. That does not mean pursuing high yields at any cost. In the world of investment, high returns and high risks are inseparable. The challenge for the NPS is to seek the highest possible returns while managing risk at an appropriate level. This balance becomes even harder to maintain if political considerations intrude, which is why professional expertise and institutional independence are essential.

National Pension Service's headquarters in Jeonju, North Jeolla. The NPS is Korea's largest institutional investor. [YONHAP]

Recently, suspicions have grown in foreign exchange markets that the government might seek to use the pension fund to help defend the value of the won. Koo Yun-cheol, the deputy prime minister and finance minister, has publicly denied mobilizing the pension fund for currency market intervention. At the same time, the government has effectively left open the option of expanding the fund’s use of strategic currency hedging.

Strategic currency hedging involves derivatives transactions in which dollars are sold and won purchased in advance, in anticipation of a future appreciation of the Korean currency. Such measures can reduce the risk of foreign exchange losses for the pension fund. However, they also limit opportunities to benefit from exchange rate gains. Depending on market conditions, strategic hedging can ultimately weigh on the fund’s overall profitability.

The key issue is who decides on these measures and for what purpose. If the underlying logic is that pension returns can be sacrificed in the name of exchange rate stability, the implications are troubling. The National Pension Service is not a discretionary pool of money that any administration or political camp can draw upon at will. It is the collective retirement savings of the entire population, entrusted to be managed with prudence, independence and a long-term perspective.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.