[Edaily Marketin JI YEONG-EUI Reporter] Fear-mongering claims that the National Pension Service (NPS) has lost hundreds of trillions of won are spreading alongside the stock market’s sharp decline. This comes as analysis shows that the market value of its major stock holdings has fallen by over 182 trillion won, compounded by claims that 240 trillion won has “evaporated” from the fund. However, experts say it is inaccurate to interpret the decline in the market value of certain stocks as an overall investment loss for the NPS.

Furthermore, critics point out that the performance of a pension fund—a long-term investment institution with a horizon spanning decades—should not be judged solely based on short-term stock price fluctuations. There are calls to evaluate actual investment performance by examining both long-term returns and the market’s benchmark returns, while separately verifying the appropriateness of asset allocation decisions, such as this year’s increase in the weighting of domestic stocks.

The Market Asks: Have Hundreds of Trillions Vanished? A Look at the National Pension Service’s Three-Year Performance Report

According to official performance data released by

the National Pension Service’s

Fund Management Headquarters on the 19th, the cumulative return from January through July was 14.84%. This exceeds the 9.88% recorded during the same period in 2024 and the 6.88% in 2025. When comparing performance through July each year over the past three years, this year’s return was the highest. Looking at a longer period, the National Pension Service’s average annual return from 2023 to 2025 was 16.05%.

The fund’s reserves also increased significantly compared to last year. As of the end of July, reserves stood at 1,684.2 trillion won, an increase of approximately 379.7 trillion won from the same period last year (1,304.5 trillion won).

However, these favorable indicators do not completely dispel the recent “fear of losses.” In July alone, total reserves fell by 181.4 trillion won compared to the previous month (1,865.6 trillion won), and the market value of domestic stocks plummeted by 124.6 trillion won.

Private estimates released amid this situation have fueled recent concerns about a market decline. According to financial information provider FnGuide, the market value of shares in the 287 listed companies in which the National Pension Service holds a 5% or greater stake shrank by 182.4 trillion won, from 515.9 trillion won at the end of June to 333.5 trillion won as of the 15th of this month. Of this total, a staggering 72% of the decline came from just two stocks: Samsung Electronics and SK Hynix.

The problem is that the calculation underlying this fear contains a significant optical illusion. The 182 trillion won figure reflects changes in the valuation of holdings in certain listed companies, and fluctuations in the number of shares held during that period may also have contributed to the decline. This figure is distinct from the National Pension Service’s overall investment gains and losses. While the 181 trillion won decrease in reserves in July overlaps with the reporting period and investment targets, and the calculation criteria differ, it is inappropriate to simply add the two figures together for evaluation. The claim of a 240 trillion won loss, which has spread indiscriminately online, is also not a figure confirmed by official statistics.

Of course, this does not mean that an unrealized loss has no economic significance. It is a fact that the market value of the held assets has decreased, even if they were not sold. However, since a decrease in valuation does not necessarily mean a fully realized loss, some point out that we must objectively distinguish between market declines caused by macroeconomic conditions and performance resulting from the National Pension Service’s decision-making.

“No Pension for Those Born in the ’90s”? The Flawed Calculations Behind the Depletion Claims

The controversy surrounding the fund’s depletion also requires a clear distinction to be made regarding the underlying assumptions of the projections. The claim circulating in some market circles—that the National Pension Fund will be depleted by 2045—uses the depletion date (2055) from the 2023 fiscal projection, which was made prior to pension reform, as its starting point. However, the pension reform implemented last year—which gradually raised the contribution rate from 9% to 13% and adjusted the income replacement rate to 43%—has fundamentally altered the underlying conditions of the fiscal outlook.

The revised fiscal outlook released by the National Assembly Budget Office last June reflects these institutional changes following the pension reform, as well as the fund’s accumulated reserves of 1,458 trillion won as of the end of 2025. The projections were calculated using an average annual fund return of 4.6% for the period 2026–2120—derived from domestic and international macroeconomic forecasts—along with the median scenario from future population projections. As a result, the fund’s financial balance is estimated to turn into a deficit in 2050, and the accumulated reserves are projected to be fully depleted by 2069. This represents a four-year delay from last year’s projection of 2065, largely due to the fund’s size expanding as a result of the high investment return rate of 18.82% recorded in 2025. The projection of depletion in 2069 is also subject to change depending on a sharp stock market decline in the second half of the year or the actual scale of losses.

Therefore, there is no basis for concluding that the depletion date has been brought forward to 2045 solely due to a short-term decline in the market value of stocks. Furthermore, it is inappropriate to repeatedly stoke fears of fund depletion based on quarterly stock gains and losses. While the potential impact of market volatility on long-term finances must be continuously monitored, experts note that fund depletion does not necessarily mean an immediate halt to pension payments.

Record-breaking gains when the market rises, but a management failure when it falls?… What matters is the ‘principle of long-term management’

Voices of caution are emerging within the investment industry regarding the tendency to view hundreds of trillions of won in paper gains during market uptrends as

record-breaking

performance, only to immediately label a decline in market value as

a management failure

once the market enters a downturn. Just as gains from rising stock prices cannot be attributed entirely to management ability, it is difficult to conclude that losses incurred during a downturn are solely due to management failure.

When evaluating the National Pension Service’s investment performance, one must examine both the benchmark (BM)—the market’s standard rate of return—and long-term returns. In fact, from 2023 to 2025, the National Pension Service’s annualized return on domestic stocks was 27.70%, outperforming the BM (26.22%) by approximately 1.5 percentage points. As of the end of July this year, it also recorded an excess return of 2.09 percentage points relative to the BM; however, this figure does not reflect the recent sharp decline in the stock market. The National Pension Service has traditionally adhered to the principle of evaluating performance over a long-term horizon of at least three years. This is why it is difficult to judge the success or failure of management based solely on short-term gains or losses.

Regardless of investment performance, the adjustments to asset allocation criteria implemented this year remain a task that requires further validation. Following a temporary suspension of domestic equity rebalancing last January, the National Pension Service raised the target allocation for domestic equities from 14.9% to 20.8% in May. The Ministry of Health and Welfare explained that this measure was taken in consideration of potential structural changes in the domestic stock market, market shocks, and long-term profitability; however, further review is needed to determine whether the decision was effective in terms of long-term expected returns and risk management.

The National Pension Service is expected to receive a report on its July investment performance at the Fund Committee meeting on the 20th. Another Fund Committee meeting is scheduled for November, and the Service plans to reassess the temporarily expanded scope of Strategic Asset Allocation (SAA) at the end of this year or early next year. During the first half of next year, it must formulate a medium-term asset allocation plan for 2028–2032 and reset investment weightings for the next five years. Given the succession of critical investment decisions, observers point out that discussions should focus on refining long-term profitability and risk management principles rather than getting bogged down in debates over short-term gains and losses. There is a growing consensus that while maintaining operational independence and verifying the appropriateness of asset allocation decisions, investment principles must not be compromised every time the market fluctuates.

One capital markets expert stated, “Long-term returns are crucial for pension funds. Rather than repeatedly focusing on how much the ‘market value’ has risen or fallen over the course of a month or two, it is important to re-examine whether the decision to expand the domestic equity allocation—which altered the existing asset allocation principles—was appropriate and to discuss areas for improvement,” he emphasized. “We must review whether to return to the previous allocation or maintain the current level, and establish overarching investment principles to be consistently applied going forward.”