Gwangju Metropolitan Office of Education Clarifies "Retirement Pension Investment Loss" Claims as "Inaccurate"

The Gwangju Metropolitan Office of Education clarified that the claim made during the administrative audit?that the Gwangju Office of Education invested the retirement pension of educational public employees in a principal-unprotected fund and incurred losses amounting to several hundred million won?is not true.

On the 6th, the Gwangju Office of Education stated in a press release that matters related to the management of the retirement reserve fund for educational public employees are not subject to regulations such as the "Regulations on Designation of Treasury for Metropolitan and Provincial Offices of Education," and that they operate a defined benefit retirement pension system (DB) in compliance with the "Workers' Retirement Benefit Security Act."

In 2021, the retirement reserve fund, which rises in tandem with wage increases, has become a significant long-term burden on educational finances. To bridge the gap between the wage increase rate (5-year average of 4.34%) and low interest rates (1.14%), the Office of Education explained that they aimed for a mid- to long-term return improvement of about 2.5% by managing a portion of the retirement reserve fund (9% of the total) in performance-based products centered on stable bonds.

Regarding the operation of performance-based products, it was also stated that after the superintendent’s handwritten approval on June 16, 2021, the application for reserve fund management was made by the relevant department head’s decision on June 24 of the same month.

The Office of Education explained, "Despite these efforts, due to increased liquidity after COVID-19 and unpredictable domestic and international adverse factors such as the Ukraine war, a decline in returns was expected," adding, "Although the performance-based product was a mid- to long-term investment product, a swift decision was made in December 2022 to switch to a high-interest (5.2%) fixed deposit, securing both stability and profitability."

They continued, "As of October this year, the size of the retirement pension reserve fund managed by the Office of Education for about 3,200 subscribers has steadily grown to 83.765 billion won, an increase of 4.79 billion won (6.08%) compared to the end of last year (78.968 billion won)," emphasizing, "The annual return rate is expected to show a remarkable performance, rising by 1.89 percentage points from 1.50% last year to 3.39%."

Furthermore, the Office of Education stated that in the financial verification conducted annually to confirm the employer’s readiness to pay retirement benefits, this year’s reserve ratio was 101.45%, comfortably meeting the legally required minimum reserve ratio of 100%.

Kim Young-dae, head of the Labor Policy Division at the Gwangju Metropolitan Office of Education, added, “We will continue to strictly adhere to asset allocation policies and operational guidelines, and do our best to manage the retirement reserve fund rationally and stably through comprehensive reviews of domestic and international economic forecasts and expert consultations.”

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