National Pension Service Changes Composition of Review Committee Members... 30% Recommended by Expert Organizations

The National Pension Fund Management Committee held the 1st Fund Management Committee meeting on the 7th and deliberated and resolved the '2022 National Pension Fund Settlement (draft)', 'Revision of Guidelines on Fiduciary Responsibility Activities of the National Pension Fund (draft)', and 'Revision of the Operating Regulations of the Fiduciary Responsibility Expert Committee (draft)'.

On this day, the Fund Committee deliberated and resolved part of the revision (draft) of the fiduciary responsibility activity guidelines, which had been controversial last year and was to be discussed by the subcommittee, including the main subjects of representative litigation.

The subcommittee, composed of four subscriber representatives (1 employer, 1 worker, 2 regional subscribers), after five discussions since February last year, agreed to add climate change and industrial safety to the key management issues and to establish standards for exercising differential voting rights, which were reflected in this guideline revision.

The agenda to unify the decision-making body for representative litigation to the Fiduciary Responsibility Expert Committee was not included in this revision due to unresolved differences among the members.

- Therefore, as before, representative litigation will be exercised by the Fund Management Headquarters, and only in exceptional cases will the Fiduciary Responsibility Expert Committee make the decision.

Additionally, the revision (draft) of the Operating Regulations of the Fiduciary Responsibility Expert Committee (hereinafter referred to as the Fiduciary Committee) to change the composition of its members was also deliberated and resolved.

Currently, the Fiduciary Committee can only appoint members recommended by subscriber organizations. Among the nine members of the previous Fiduciary Committee, six were composed of lawyers and accountants.

Going forward, some of the Fiduciary Committee members (3 out of 9) can be recommended by related expert organizations.

During the past three years when the first Fiduciary Committee was active, three full-time members and six part-time members were recommended respectively by employers, workers, and regional subscribers. The three full-time members took turns annually serving as the chairpersons of the Fiduciary Committee, the Investment Policy Expert Committee, and the Risk Management and Performance Compensation Expert Committee.

Meanwhile, the 2022 National Pension Fund settlement results show that the fund's net assets amount to 890.4 trillion KRW, a decrease of about 58 trillion KRW compared to the previous year's reserve of 948.7 trillion KRW.

Looking at the details of the increase and decrease, after paying benefits (34 trillion KRW) from premium income (55.9 trillion KRW), the accumulated amount was 21.9 trillion KRW, and the asset management result for the year increased by 26.4 trillion KRW, while the valuation gain of investment assets decreased by 106.6 trillion KRW.

Minister Cho Kyu-hong stated, "Last year, the fund reserves decreased due to a deteriorated investment environment. Although returns have partially recovered this year, multifaceted efforts are needed for future generations," and added, "We plan to seek measures to improve fund returns."

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