Opinion: National Pension Fund should not be used as a policy piggy bank

· UPI

Dec. 19 (Asia Today) -- South Korea's National Pension Fund exists for one purpose: to protect retirement security by maximizing returns under a disciplined framework of stability and long-term sustainability. It is not a convenient pool of capital for a chairman's "long-held dream" or a government's near-term policy agenda.

National Pension Service Chairman Kim Sung-joo said at his inauguration ceremony that the pension must "step forward to resolve the serious housing problem," investing for young people who have postponed marriage until they can buy homes and for newlyweds seeking housing. He said the pension should "serve as a funding source" for housing offered at "appropriate and reasonable prices."

Kim pointed to Singapore's Central Provident Fund and the Netherlands' social housing model, arguing that pension fund investment can underpin large-scale housing supply. In practical terms, his remarks signaled an intent to fully mobilize the pension fund for housing policy.

The problem is not whether housing is important. It is. The problem is whether a retirement fund should be steered toward goals that the state should finance transparently through public budgets.

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South Korea's National Pension Act is clear. Article 102 mandates the fund be managed to maximize returns and ensure long-term financial stability. Profitability and stability are established as the first and second principles of fund management. A broad housing supply role risks pulling the fund away from those principles and turning investment policy into welfare policy by another name.

There is also a question of governance. The chairman does not have the authority to decide how the fund is invested. Those decisions are made by the National Pension Fund Management Committee, chaired by the minister of health and welfare. Any push to repurpose the fund for housing should not be framed as a personal vision. It should be debated as a matter of law, governance and fiduciary duty.

President Lee Jae-myung's comments about expanding the fund's investment in domestic stocks raise similar concerns. During a Dec. 16 briefing by the Ministry of Health and Welfare and the National Pension Service, Lee questioned domestic stock holding limits and the relationship between rising stock prices and pension fund growth, urging officials to "give more thought to pension management." In context, the message can be read as encouragement to use pension capital to support the stock market, following discussion of the fund's role in responding to won-dollar volatility.

The numbers underscore why this matters. The fund totals 1,413 trillion won (about $1.06 trillion). Even shifting 1% of that into domestic equities would be a large injection with market impact. It could also deepen the risk that retirement security becomes tethered to domestic market swings and policy pressure.

That risk will only grow as the pension's cash-flow dynamics tighten. In about five years, benefit payouts are expected to exceed premium income, forcing the fund to begin selling assets. The more aggressively the fund is used as an economic lever today, the more painful the market shock may be when it must pull money back out tomorrow.

A national pension system relies on public trust. That trust rests on profitability, stability, public interest, sustainability and operational independence. If those principles are weakened and the fund begins to serve personal ambitions or government policy needs, confidence can collapse quickly and once lost, it is difficult to restore.

- Reported by Asia Today; translated by UPI

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