The government has set a target return rate of 5.4 percent for the National Pension Service fund operations over the next five years.

On Friday, the NPS announced that its Fund Management Committee had approved the midterm asset allocation plan for the 2025-2029 period, establishing a target return rate of 5.4 percent.

In accordance with the committee's decision earlier this month to increase the long-term allocation of investments in high-risk assets to 65 percent, the target asset proportions by the end of 2029 were specified as 55 percent in stocks, 30 percent in bonds and 15 percent in alternative investments.

The new five-year plan was unveiled ahead of the state-run fund's overhaul of its investment portfolio framework next year. To enhance profitability and adaptability to market changes, the new method will no longer predetermine investment proportions according to asset classes. Instead, it will simplify asset allocation into mainly risky assets, such as stocks and alternatives, and non-risky assets, such as bonds.

The implementation of new portfolio system, revamped for the first in 18 years, will begin with the alternative assets sector next year.

Friday's plan also outlined target asset allocations by the end of 2025 according to previous asset categories: 14.9 percent in domestic stocks, 35.9 percent in foreign stocks, 26.5 percent in domestic bonds, 8 percent in foreign bonds and 14.7 percent in alternative investments.

Managed by the NPS on behalf of the Minister of Health and Welfare, the NPS Fund Management Committee is chaired by the Minister.

"The asset allocations have been decided by considering various market impacts while maximizing long-term returns within risk limits," stated the NPS. "To boost long-term returns, the fund will gradually increase the proportion of risky assets, while also maintaining policies focused on progressively expanding alternative investments."