Lengthening Appointment of CIO as 'Gokganjigi' for the Mutual Aid Association

The new Chief Investment Officer (CIO) of the Korea Local Government Officials Mutual Aid Association, which manages a fund worth approximately 30 trillion won, is expected to be decided around mid-next month. Due to the somewhat stringent resolution requirements of the delegates' meeting compared to other mutual aid associations, the process may take even longer. The appointment of the new CIO for the Police Mutual Aid Association is also delayed, raising concerns that the investment and business plans of major mutual aid associations could be affected.

According to the investment banking (IB) industry on the 31st, the Korea Local Government Officials Mutual Aid Association plans to hold a delegates' meeting in mid-next month to discuss the CIO appointment agenda. In January, three final candidates were shortlisted early: current CIO Heo Jang, Lee Do-yoon, former head of capital management at the Yellow Umbrella Mutual Aid, and Park Cheon-seok, former head of fund management at the National Credit Union Federation of Korea. The personnel verification process has been completed. It is said that the appointment was delayed due to overlaps with auditor elections and financial settlements.

The current CIO, Heo Jang, is likely to be reappointed. He has achieved solid performance so far, and given the challenging internal and external environment, there is strong support for a stable appointment. Heo's term officially ended in February. Since his appointment in February 2022, Heo recorded stable returns of 4-5% even during the volatile period following COVID-19. In 2022, when the National Pension Service suffered losses exceeding 8%, he achieved a 3.8% return.

However, the appointment may be delayed due to the more stringent resolution conditions of the delegates' meeting compared to other mutual aid associations. The CIO appointment is decided by the delegates' meeting, composed of 55 members including the chairman, and requires the approval of at least two-thirds (37 members) of the total delegates. If no candidate receives 37 or more votes, a yes/no vote is held for the candidate with the most votes, and they must receive at least 37 approvals to be confirmed. In contrast, the Military Mutual Aid Association and the Teachers Mutual Aid Association convene meetings with a majority of the total delegates (or operating committee members in the case of the Teachers Mutual Aid Association) present, and agendas are approved by a majority of those present.

There have already been several failed attempts at executive appointments under these conditions at the Korea Local Government Officials Mutual Aid Association. For example, the appointment of a managing director was rejected six times, and current chairman Kim Jang-hoe was only elected after two failed attempts, finally securing 40 votes.

The appointment of the CIO at the Police Mutual Aid Association is also delayed. Since the retirement of former CIO Han Jong-seok in October 2023, the position has remained vacant for over a year. This occurred while the chairman position, responsible for convening the personnel committee, was also vacant for about eight months. With former Incheon Police Chief Lee Yang-sang elected as the new chairman on the 26th, the CIO appointment process is expected to accelerate.

The Teachers Mutual Aid Association, which manages the largest assets among mutual aid associations, is in a better situation. Former CIO Park Man-su's term expired on January 16, and internal candidate Ko Jae-taek, head of the Fund Management Strategy Office, was appointed as the new CIO within the same month. He began his term on the 1st of last month.

Seoul Yongsan-gu Daehan Local Government Mutual Aid Association building exterior. Provided by the Local Government Mutual Aid Association

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