'Big Event for OCIO Next Month'... Asset Management and Securities Industries Focus on Korea Workers' Compensation & Welfare Service

Korea Workers' Compensation and Welfare Service to Select OCIO Operator by Late April
Estimated Fund Size Around 4 Trillion KRW...Part to Be Entrusted to Operator
Usually One Securities and One Asset Management Selected...Possibility of Single Operator Selection
If Single Operator Chosen, Competition Expected to Intensify

[Asia Economy Reporter Hwang Yoon-joo] As the retirement pension fund system for small and medium-sized enterprises (SMEs) is set to be implemented from April 14, the Korea Workers' Compensation and Welfare Service (KWCWS) is expected to begin selecting an Outsourced Chief Investment Officer (OCIO) operator as early as the end of April. Unlike the usual practice of selecting multiple operators, there is speculation that only one OCIO operator may be chosen, making the competition even fiercer.

According to industry sources on the 18th, KWCWS will hold the first Fund System Operation Committee meeting on April 14 to decide on the management method for the retirement pension reserves. To this end, discussions are currently underway with the Ministry of Employment and Labor regarding the composition of the Fund System Operation Committee. A public announcement for operator recruitment is expected by early May at the latest. Once the OCIO operator is decided, the main bank selection and other procedures will follow, with recruitment of retirement pension subscribers expected to begin in the second half of the year. The fund size has not yet been disclosed.

Although the KWCWS Operation Committee will decide on the management method, it has been tentatively agreed that reserves will be managed using OCIO or similar methods during the initial establishment phase. The committee will determine detailed matters such as OCIO operator selection criteria, the number of operators, and fees at its first meeting. A KWCWS official stated, "Since the retirement pension fund system is in its early stages, the reserves are not large," adding, "Generally, one asset management company and one securities firm are selected, but it may be difficult to select multiple operators."

Yeouido Stock Market Area View

The industry estimates the size of the SME retirement pension fund to be around 4 trillion KRW. The Operation Committee will decide the amount of funds to be entrusted to the OCIO operator. If a single operator is chosen, fierce competition between asset management companies and securities firms is expected. This is because even with a relatively small reserve size, securing a market lead is significant.

Securities firms actively pursuing the OCIO market include Korea Investment & Securities, Samsung Securities, NH Investment & Securities, KB Securities, Mirae Asset Securities, and Shinhan Financial Investment. Among asset management companies, Mirae Asset Global Investments, Samsung Asset Management, Korea Investment Management, Shinhan Asset Management, KB Asset Management, and Hanwha Asset Management have entered the market.

The competition among asset management companies is expected to narrow down to Mirae Asset Global Investments and Samsung Asset Management. In January last year, Mirae Asset Global Investments and Samsung Asset Management were selected as weekly managers for the Ministry of Strategy and Finance's pension investment pool, indicating Mirae Asset Global Investments' strong commitment to the OCIO market.

An industry insider said, "The OCIO market is not a business that can be selected after just a few months of preparation," adding, "If only one OCIO operator is selected, the Operation Committee is likely to take a conservative approach."

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