News about retirement funds

Korea's National Pension Service (NPS) loosened its rebalancing discipline as shares rallied: it raised its domestic-stock target to 14.9% in January and to 20.8% in May, widened the permitted range and paused rebalancing through June. When prices fell, the reported value of its stakes of at least 5% in 287 listed companies dropped by about 182 trillion won ($137 billion) between June 30 and Thursday, with Samsung Electronics and SK hynix accounting for most of the decline. The editorial argues that allocation rules should be set in advance and not changed once a correction has begun, and questions the accelerated listing of leveraged ETFs tied to those two chipmakers. Minutes of the committee meetings that approved the changes will not be released until 2030, and the writer urges the NPS to explain the principles it applied.

According to Bloomberg, executives of Chile's pension funds asked regulators to curb volatile interest-rate derivatives before a downturn in US Treasuries left them with billions of dollars in losses. Fund managers had flagged the risks, and these positions have hit Fund E, the most conservative fund in the system, hard. Earlier, the funds were reported to have lost about $7.7 billion on interest-rate-related positions. Some lawmakers called the losses “very serious” and demanded action against those responsible, while another lawmaker said authorities must first determine whether the investments were within the permitted framework. The AFP Association stressed that fund performance should be judged over the long term rather than by short-term fluctuations.