National Pension Class Action... Business Community Says "The Fire Is Not Out" (Comprehensive)

Government Influence at Work 'Worries After the Presidential Election'
Could Continue Repeating Without Reform

Last month, participants spoke at the "Hyundai Development Company-Kakao-Emart Regular General Meeting of Shareholders National Pension Service Shareholder Rights Exercise Urging Press Conference" held in front of the National Pension Service Chungjeongno building. At the press conference, People’s Solidarity for Participatory Democracy, the National Action for Strengthening Public Pensions, the Korean Confederation of Trade Unions, and the Federation of Korean Trade Unions demanded, "At the March regular general meeting of shareholders, recommend professional manager public interest directors to Hyundai Development Company, Kakao, and Emart, and establish a system to dismiss problematic directors and prevent recurrence of company and shareholder value decline."

[Asia Economy Reporters Choi Dae-yeol and Lee Hye-young] Although the government’s proposed amendment to the National Pension Service (NPS) representative lawsuit has effectively entered the process of withdrawal, the business community remains far from reassured. There is still a possibility that it could be pushed forward again depending on the government’s will. The controversial guidelines were promoted amid insufficient communication between the relevant ministries and stakeholders around the time the amendment was introduced last December, raising concerns among business circles that similar situations could arise in the future.

On the 9th, Yoo Jeong-ju, head of the Corporate System Team at the Federation of Korean Industries, said, “Even if the current government steps back, concerns about the NPS representative lawsuit will continue under the next administration,” adding, “If the NPS organization and governance, which are inevitably influenced by the government, are not reformed, this problem could keep recurring.” Son Seok-ho, head of the Social Policy Team at the Korea Employers Federation, noted, “There is now a consensus even among ex officio government members that this issue requires a more cautious approach.”

The business community has long argued that the amendment to the guidelines improperly delegates authority and that the revision process should be halted. They contend that it is unjust for the Decision-Making Committee (수책위) to have exclusive authority over the NPS representative lawsuit instead of the Fund Management Headquarters. Since virtually all decisions related to business activities could become subject to lawsuits, companies claim that transferring authority to the Decision-Making Committee could cause significant disruptions to management.

Overview of the Amendment to the Operation Guidelines for the Trustee Responsibility Expert Committee Promoted by the Ministry of Health and Welfare

Business Community: "Improper Delegation of Authority
Decision on Representative Lawsuits by Decision-Making Committee May Be Illegal"
Concerns That Excessive Litigation Could Harm Pension Beneficiaries

Currently, the NPS holds more than 5% stakes in a total of 261 domestic KOSPI and KOSDAQ listed companies. Among these, the NPS is the largest shareholder in 9 companies and the second-largest shareholder in 208 companies. There are also 48 companies in which it holds more than 10% of shares.

One reason companies oppose the amendment is that excessive litigation could harm not only pension funds and businesses but also ordinary citizens who are pension subscribers. Last month, seven employer organizations, including the Korea Employers Federation, issued a statement calling for a suspension of the guideline amendment and for clear legal provisions regarding the procedures and entities responsible for NPS representative lawsuits.

In the statement, the organizations said, “Despite companies, which bear 42% of the total pension insurance premiums, being direct stakeholders in representative lawsuits, neither the Ministry of Health and Welfare nor the NPS consulted with the business community beforehand,” adding, “Forcibly pushing through the amendment is merely nominally prioritizing shareholder value but is in reality management interference, which distorts the stewardship code.”

At the 'National Pension Fund Management Committee' held at the Plaza Hotel in Jung-gu, Seoul, last July, citizens held a picket protest urging Kwon Deok-cheol, Minister of Health and Welfare, to enact the Act on Support for Deinstitutionalization of Persons with Disabilities. Photo by Kang Jin-hyung aymsdream@

As of October last year, the NPS fund size was KRW 917.8 trillion, with domestic stock investments accounting for 17.9%, or KRW 163.9 trillion. The NPS’s share in the domestic stock market stands at 6.7%. Yoo emphasized, “If authority is transferred to the Decision-Making Committee, companies will suffer losses, and the NPS, whose purpose is to secure citizens’ retirement, will ultimately be harmed as well,” adding, “Even if this is discussed again, pension reform and structural reorganization must precede any cautious approach.”

According to related ministries and the industry, the agenda for the upcoming Fund Management Committee meeting at the end of this month includes the existing amendment to the Decision-Making Committee’s operational guidelines. It is reported that the Ministry of Health and Welfare, the competent authority, still supports the plan to delegate authority to the Decision-Making Committee. An industry insider said, “Since the amendment contains many unreasonable aspects, the ongoing exhausting controversy itself is a burden,” adding, “Although the transfer of representative lawsuit authority has been effectively canceled, there is a possibility it will be pursued again, so we cannot be fully reassured.”

This content was produced with the assistance of AI translation services.