South Korea pension chief defends rebalancing delay amid parliamentary dispute
In short
South Korea's National Pension Service chief defended delaying domestic-stock rebalancing at an October 14 parliamentary audit. He said applying the original rules would have required sales of more than 800 billion won a day, while opposition lawmakers questioned political influence and demanded meeting records.
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South Korea's National Pension Service chairman Kim Seong-ju (김성주) defended the postponement of domestic-stock rebalancing during an October 14 parliamentary audit, rejecting opposition allegations that the fund had been used to support stock prices for political purposes. Kim told the National Assembly's Health and Welfare Committee that following the original rules would have required daily sales of more than 800 billion won, potentially harming the market and the pension fund. [ 5 , 10 , 15 ]
The fund management committee temporarily delayed rebalancing for six months in January and raised the domestic-stock target from 14.9% to 20.8% in May. Under its usual asset-allocation rules, the pension fund adjusts holdings when rising share prices push the domestic-stock proportion above its target. Kim said experts had viewed the Korean market optimistically at the time and had not disagreed over the decisions. [ 5 , 15 ]
People Power Party lawmakers questioned whether the decisions were intended to support shares ahead of the June local elections. They demanded meeting minutes and testimony from former presidential policy chief Kim Yong-beom (김용범). Democratic Party lawmakers rejected the proposed witness appearance as a political attack and warned that releasing the minutes could reveal ongoing investment strategies. [ 6 , 12 ]
Kim said the committee's regular medium-term asset-allocation meeting takes place at the end of May and that the timing was unrelated to the election. He argued that sales under the original rules would have exceeded 10% of KOSPI turnover and caused a market shock. These were his estimates of what would have happened without the delay. [ 10 ]
Asia Economy reported that information submitted by the pension service estimated additional returns from the delay during February through June and as of the end of July. The service cautioned that its opportunity-cost estimates were sensitive to changes in stock prices, interest rates and exchange rates, and varied substantially with the period assessed. [ 8 ]
Why it matters
The dispute concerns management of retirement savings and the fund's exposure to domestic stocks. Lawmakers also disagreed over whether releasing meeting minutes would reveal investment strategies.
Key facts
- National Pension Service chairman Kim Seong-ju (김성주) defended the rebalancing delay at the October 14 parliamentary audit. [ 5 , 10 , 15 ]
- The fund management committee delayed rebalancing for six months in January and raised its domestic-stock target from 14.9% to 20.8% in May. [ 5 , 15 , 20 ]
- Kim said applying the original rules would have required daily stock sales exceeding 800 billion won. [ 7 , 10 , 11 ]
- Opposition lawmakers demanded fund management committee minutes; ruling-party lawmakers warned that disclosure could expose investment strategies. [ 3 , 5 , 15 ]
- Kim denied that the decisions were politically motivated and said experts had agreed on them. [ 5 , 10 , 15 ]
Confirmed by several sources
Still unclear
- Whether political considerations influenced the decisions is disputed. Opposition lawmakers alleged political influence, while Kim rejected that explanation.
- The scale of gains attributable to the delay is an estimate. Asia Economy reported that the fund cautioned its estimates were sensitive to market variables and the period used.