SEOUL, February 27 (AJP) -South Korea’s National Pension Service (NPS) posted a record annual investment return of 18.82 percent in 2025 — the highest since its establishment in 1988 and outperforming major global pension peers — driven by an exceptionally strong domestic equity rally.
The double-digit return generated 231.6 trillion won in earnings, nearly five times its annual pension payout of 49.7 trillion won, and lifted total assets under management to 1,458 trillion won, the fund said Thursday.
The cumulative average annual return since inception reached 8.04 percent.
The NPS outperformed major overseas pension funds on a calendar-year basis. Japan’s Government Pension Investment Fund returned 12.3 percent, Norway’s Government Pension Fund Global gained 15.1 percent, Canada Pension Plan Investment Board posted 7.7 percent, while the Netherlands’ ABP recorded a negative 1.6 percent return.
By asset class, domestic equities delivered an exceptional 82.44 percent return, leading overall performance. Overseas equities gained 19.74 percent, domestic bonds returned 0.84 percent, overseas bonds rose 3.77 percent and alternative investments yielded 8.03 percent.
The NPS attributed the sharp rise in domestic stocks to a rally in artificial intelligence- and semiconductor-related shares, along with expectations for government capital market reforms. The benchmark KOSPI index soared 75.63 percent in 2025, far outpacing the global average gain of 22 percent.
Overseas equities remained resilient despite uncertainties surrounding U.S. tariff policy, supported by solid earnings from global technology companies.
Domestic bonds posted modest gains following two benchmark rate cuts and signs of economic recovery. Overseas bonds also generated positive returns, benefiting from three U.S. rate cuts and declining yields amid growth concerns.
Returns from alternative investments reflected valuation gains and realized profits, the fund said.
NPS Chairman Kim Sung-joo said the record performance stemmed from disciplined risk management, diversified asset allocation and continued improvements in operational infrastructure, including the performance-based compensation system.
“In particular, the strong rise in domestic equities contributed significantly,” Kim said, adding that the fund would further strengthen investment capabilities and pursue flexible asset allocation and regional diversification to secure stable long-term returns.
The final evaluation of the 2025 fund management performance will be confirmed by the Fund Management Committee around the end of June following a review by its risk management and compensation advisory panel.
Early indicators suggest momentum has carried into 2026. Market observers estimate the NPS could already be seeing returns of around 9 percent for the year to date, supported by a sharp rally in Korean equities during the first two months.
Samsung Electronics on Thursday joined the $1 trillion market capitalization club, while the KOSPI has surged close to 50 percent so far this year, extending a powerful two-year rally.
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