South Korea's National Pension Service (NPS) said on Wednesday it would significantly increase its asset allocation to overseas and alternative investments to diversify its holdings.

NPS, the world's third-largest pension fund with around 68 percent of its $579 billion portfolio invested in South Korea, has been pressured to diversify beyond the limitations of South Korea's economy.

The fund is seen as too big for South Korea's relatively limited opportunities, and studies suggest the fund cannot earn the returns needed to sustain the fund for decades to come if it continues to concentrate on local assets.

The fund said in a statement that it aimed by end-2023 to have around 30 percent of its assets in overseas stocks and around 5 percent in overseas bonds, up from 17.4 percent and 3.8 percent respectively as of end-2017.

NPS' projected that its alternative investments such as real estate would reach 92.6 trillion won, or 12.7 percent of total assets, by end-2019 and was targeting 15 percent by the end of 2023.

The NPS, which pays retirement pensions to all South Koreans who contribute to the fund, had 625.9 trillion won ($578.57 billion) in assets under management as of March, which was expected to swell to 2,561 trillion won by 2043, it said on its investment management website.

The fund, which holds key stakes in nearly all major South Korean companies thanks to its size and concentrated investment in the local market, also plans to consult Korean Air Lines' management over the recent controversy surrounding the family that owns its parent conglomerate.

Korean Air Lines Chairman Cho Yang-ho stepped down from his post of co-chief executive at budget affiliate Jin Air , amid public backlash prompted by his younger daughter Cho Hyun-min's behavior. She is being investigated by police after she allegedly threw water at a person attending an April business meeting.