Private School Teachers' Pension (사학연금) achieved a 23.73% return in the first half of 2025, driven by a 60.92% allocation to the electrical and electronics sector in its directly managed domestic stock portfolio (year-end basis). The fund's direct management assets reached 19.6175 trillion won (54.21%) as of June-end, surpassing delegated management at 16.5707 trillion won (45.79%)—a reversal from the traditional 40% direct allocation guideline. The outperformance stemmed from semiconductor-led gains in the electrical/electronics sector and the fund's ability to respond rapidly to market conditions through direct investment. Total assets under management grew from 23.4933 trillion won in 2021 to 36.1882 trillion won by June 2025. However, the fund faces long-term fiscal pressures: the 6th actuarial review released in January 2025 projects the fund will turn deficit in 2028 and deplete by 2047, driven by rising benefit payments, school closures triggering early retirements, and declining student enrollment.
Direct Management Surpasses Delegated Allocation at 54%
Private School Teachers' Pension revised its Investment Policy Statement (IPS) to shift the direct-to-delegated ratio from 60:40 to 50:50. Actual implementation exceeded the guideline: direct management reached 19.6175 trillion won (54.21%) while delegated management stood at 16.5707 trillion won (45.79%) as of June-end. The shift reflects strong historical direct management performance and the operational advantage of immediate liquidity adjustments in response to market conditions. This structure contrasts with peer institutions: National Pension Service maintains 48.1% direct management, Government Employees Pension 52.7% for stocks and 68.6% for bonds (May-end), Administrative Mutual Aid 42.9% (year-end, stock basis), and Teachers' Mutual Aid 19% (Q2).
Three Consecutive Years of Double-Digit Returns Through June 2025
The fund recorded annual returns of 13.46% in 2023, 11.63% in 2024, and 18.93% in 2025, with the first half of 2026 reaching 23.73%. The only negative year since 2021 was 2022 at -7.75%. Domestic and international equities drove the outperformance, with stock selection generating returns above benchmark indices. As of June-end, the asset composition stood at: stocks 17.499 trillion won (48.36%), bonds 10.3336 trillion won (28.56%), alternative investments 8.1129 trillion won (22.42%), and cash 242.7 billion won (0.67%). Geographic allocation split nearly evenly: domestic 19.5248 trillion won (53.95%) and overseas 16.6634 trillion won (46.05%). A fund official stated the IPS mandates comprehensive consideration of stability, liquidity, and profitability in all investment decisions.
Fund Projected to Deplete by 2047 Amid Structural Challenges
The 6th actuarial review presented to the Ministry of Education in January 2025 projects the fiscal balance will turn negative in 2028 and the fund will deplete by 2047. Despite three consecutive years of double-digit returns, the five-year average annual growth in benefit payments reached 11.0% and beneficiary count increased 7.9%, outpacing investment gains. Fiscal surplus contracted from 2.135 trillion won in 2021 to 449.3 billion won in 2024—a reduction to one-fifth of the original level. School closures add unique pressure: 410 individuals received early retirement pensions due to school closures as of year-end 2024, including 65 in their 30s and 40s. Student enrollment is projected to decline from 6.978 million in 2025 to the low-4-million range in the early 2040s. The National Assembly Budget Office stated "parametric reform through contribution rate and benefit adjustments is urgent" and "fundamental institutional redesign considering member characteristics is also necessary." The member composition has shifted since the system's 1975 launch: university hospital staff grew from 57,000 to 126,000 in 2024 (39.5% of total members), while teacher enrollment peaked at 174,000 in 2015 before declining.
New CIO Baek Joo-hyun Appointed With Two-Year Term
Baek Joo-hyun began serving as Chief Investment Officer (CIO) at the end of last month. Baek previously held positions at Samsung Life's New York office and asset management division, and served as Public Officials Pension CIO from 2022. During his tenure, the Public Officials Pension recorded an 11.5% mid-to-long-term asset return in year-end 2023—the highest since 2006—resulting in a one-year term extension. He succeeds former CIO Jeon Beom-sik, who completed a three-year term (two-year base plus one-year extension) before moving to the National Federation of Fisheries Cooperatives. Standard CIO terms at pension funds and mutual aid associations run two years with potential one-year extensions based on performance. The fund's 28 investment staff (excluding strategy and risk management units) manage the growing direct investment portfolio. Organizational capacity development remains a priority as direct management responsibilities expand, requiring enhanced stock selection and post-investment monitoring capabilities.
FAQ
What was Private School Teachers' Pension's return in the first half of 2025?
Private School Teachers' Pension achieved a 23.73% return in the first half of 2025, driven by a 60.92% allocation to the electrical and electronics sector in its directly managed domestic stock portfolio. This return was approximately five times the fund's typical 4-5% annual target.
When is the Private School Teachers' Pension fund projected to deplete?
According to the 6th actuarial review presented to the Ministry of Education in January 2025, the fund's fiscal balance will turn negative in 2028 and the fund will fully deplete by 2047. The projection reflects rising benefit payments, school closures, and declining student enrollment from 6.978 million in 2025 to the low-4-million range in the early 2040s.
