SEOUL (Reuters) – The head of South Korea’s market watchdog stressed on Thursday the significant role public pension funds play in the success of ongoing capital market reforms, urging the fund to escalate its investments in the domestic market.

“The responsible role of pension funds and asset management companies as long-term investors is crucial to expanding the investment base in the capital market,” said Lee Bok-hyun, governor of the Financial Supervisory Service (FSS).

Lee cited market participants’ assessment that the Japanese pension fund’s increased investment in domestic markets contributed to the success of market reforms.

In February, South Korea announced a “Business Value Growth Program,” echoing Japan’s capital market reforms, to shore up the country’s stock market with measures to encourage higher shareholder returns from listed companies. Several follow-up measures, including tax cuts, have since been introduced to bolster the program.

Lee’s comments were made at a forum jointly organized by the FSS, the National Pension Service (NPS), the world’s third-largest pension fund with assets of 1.147 trillion won ($857.12 billion) at the end of June, and the Korea Exchange.

NPS has been aggressively increasing its investments in foreign assets in recent years to earn higher returns and delay the depletion of its fund. Its funds are expected to run out by 2056 due to a rapidly aging population.

The NPS said in March it would decide whether and to what extent it would allocate its assets to the government’s corporate reform after assessing the plan’s details. (1 dollar = 1,338.2000 won)