National Pension, strengthening security operations amid Middle Eastern turmoil... Urging the establishment of a fund crisis response system

The Minister of Health and Welfare, Jeong Eun-kyung, stated that in the context of instability in the Middle East leading to increased volatility in the foreign exchange market, measures will be strengthened to ensure the safety of the National Pension Fund’s operations through enhanced market inspections and crisis response.

The National Pension Fund Operations Committee held its third meeting of the year on the 14th at the Seoul Government Office in Jongno-gu, Seoul, where it examined the risks that recent financial market turbulence could pose to fund operations and reviewed plans to improve overseas investments. This committee is the highest decision-making body for deliberating and deciding on major matters related to the operation of the National Pension Fund, chaired by the Minister of Health and Welfare. Given that the fund invests broadly in domestic and international stocks, bonds, alternative investments, and other areas, it is inevitably sensitive to changes in the international situation.

In his opening remarks, Director Jeong analyzed that although the market seemed somewhat stable after a two-week ceasefire between the U.S. and Iran last week, the ceasefire negotiations subsequently broke down, increasing uncertainties in the Middle East again. He explained that with international oil prices rising above $100 per barrel, not only energy markets but also the overall supply of raw materials, including naphtha, and medical products face greater disruption risks. Rising oil prices will increase energy import costs, burden businesses, and may ultimately lead to inflation, which is seen as a significant pressure on the real economy.

Director Jeong emphasized that the volatility in the foreign exchange market, which could directly impact the National Pension, has yet to subside. Since overseas assets constitute a large portion of the pension’s investments, sharp fluctuations in the value of major currencies such as the Korean won and the U.S. dollar will immediately affect asset valuation and returns. For this reason, extreme exchange rate fluctuations are considered to go beyond mere financial market issues and are viewed as directly related to the stable operation of the pension fund.

In response, Director Jeong called for the Fund Operations Headquarters to closely monitor macroeconomic and financial market changes and to further strengthen the crisis management system to respond swiftly to uncertainties. She also instructed that any risk situations must be reported immediately to the Fund Operations Committee. The market generally expects that the Middle East situation, oil prices, and exchange rate trends are likely to continue influencing the overseas investment strategies and risk management directions of the National Pension Fund in the short term. Such trends suggest that if global geopolitical shocks recur in the future, the importance of safe asset allocation and exchange rate risk management within pension fund operations may become even more prominent.