[Anchor]

During the National Assembly audit of the National Pension Service (NPS) held today (October 14), a fierce debate erupted over the NPS increasing its domestic stock holdings while the stock market was surging. The opposition party strongly criticized the move, claiming it merely provided foreign investors with an opportunity to realize gains, while the NPS countered that such criticism is merely a hindsight-based interpretation.

Reporter Han Sung-hee has the details.

[Reporter]

The fund management return recently disclosed by the National Pension Service stands at 14.84% as of the end of July.

This is a drop of more than 12 percentage points in just one month, compared to 27.22% at the end of June.

The main reason was that as the domestic stock market declined, the return on domestic stocks fell from 107.37% at the end of June to 60.11% by the end of July.

The closing price of the KOSPI at the end of July was higher than today's closing price, which barely defended the 6,000-point level after starting around the 6,500 range.

Consequently, current returns may have dropped even further.

At the parliamentary audit of the NPS, the opposition party took issue with the fact that back in January, even when the proportion of domestic stocks had already exceeded the target, the NPS did not sell them—meaning it did not conduct rebalancing—and instead actually increased its domestic stock weight in May.

They argued that the fund should have cashed out stocks to secure more retirement funds for the public, but instead fueled an abnormal stock price surge, giving foreigners an opportunity to sell at the peak.

[Lee Dal-hee / People Power Party Lawmaker: The damage fell squarely on individual retail investors who went all-in, trusting the government's stock market boost policies. There are even nicknames abroad calling our National Pension Service 'our ATM'....]

[Kim Sung-joo / Chairman and CEO of the National Pension Service: If we had not suspended rebalancing, we probably would have had to sell about 800 billion won worth of shares a day, which would have inflicted a severe shock on the market....]

A debate also unfolded over whether the NPS was mobilized to support the administration's stock market boost ahead of the June local elections.

[Kim Tae-ho / People Power Party Lawmaker: I demand a parliamentary investigation into suspicions of weaponizing the public's retirement funds for political tools, the suspension of NPS rebalancing, and the expansion of domestic stock weight.]

[Kim Sung-joo / Chairman and CEO of the National Pension Service: I have never experienced a case where government requests were passed as-is by the Fund Management Committee. Going back to the market situation in South Korea at that time, there were no differing opinions on suspending rebalancing.]

The People Power Party pressured the NPS to disclose the minutes of the meetings when rebalancing was suspended and the domestic stock weight was increased, but the Democratic Party and the NPS countered that, under the National Pension Act, the principle is to disclose them after four years.

(Photo: Yonhap News)
Reported by Shin Dong-hwan | Video by Oh Young-taek | Graphics by Kim Ye-ji