Amid the conclusion of the term for the Chief Investment Officer (CIO) of the National Pension Service, overseeing the management of 1,170 trillion won in public retirement funds as of the end of October 2024, market interest is focused on delays in announcements regarding the current CIO's term extension or the recruitment of a successor. This is interpreted as a ripple effect from the chaos following the emergency martial law declaration on the 3rd of last month, which led to a constitutional impeachment crisis. Industry insiders are leaning towards the reappointment of the current CIO, Seo Won-joo.
According to the government and financial investment sectors on the 7th, the term end date for Seo Won-joo, who took office as CIO of the National Pension Service at the end of 2022, was the 26th of last month. The basic term for the National Pension CIO is two years, and it can be extended annually based on performance. Speculation arose in the market that the National Pension Service would announce Seo's future before the end of his term. However, there has been no news as the new year begins.
This seems to be because President Yoon Suk-yeol's sudden declaration of emergency martial law at the beginning of last month and the subsequent impeachment crisis have paralyzed a significant portion of the government's operations. The decision on whether Seo will be reappointed as the National Pension CIO is finalized through the approval of the higher agency, the Ministry of Health and Welfare, and the chairman of the National Pension Service. Given that the personnel appointments involving the Minister have been entangled in the turmoil of impeachment, the personnel decision for the National Pension CIO may be undetermined for the time being.
Of course, there will not be a gap in the duties of the CIO itself. According to Article 28, Paragraph 5 of the Public Institutions Management Act, executives whose terms have expired must carry out their duties until a successor is appointed. A National Pension official noted, "Currently, Seo Won-joo (CIO) is handling scheduled tasks as usual." This official, however, emphasized that whether Seo would be reappointed or replaced by another individual has not been decided.
Market participants believe that the government is more likely to opt for a one-year term extension for the CIO rather than replacing them. This is because the National Pension Service recorded double-digit revenue rates during the last two years since the appointment of Seo. From an organizational management perspective, it has also received evaluations of being smoothly managed without significant incidents. An industry insider stated, "If there were plans to replace the CIO, announcements would have been made by now, and several candidates would have been discussed in the market."
The National Pension Fund Management Office recorded an annual revenue rate of minus (-) 8.22% just before Seo's appointment in 2022. The -8.22% was the third-worst revenue rate in history and the worst since the National Pension System was introduced in 1988. However, under Seo's first year in 2023, the fund achieved a revenue rate of 13.6%, with revenue surpassing 100 trillion won, setting a record high. By the end of October 2024, it has recorded a cumulative revenue rate of 11.34%.
Since the establishment of the National Pension Fund Management Office in 1999, few have completed their term as CIO. The third CIO, Oh Sung-keun, stepped down with the onset of the Lee Myung-bak administration, while the sixth, Hong Wan-seon, failed to extend his term by one year due to conflicts with the Service chairman. The seventh, Kang Myun-wook, also did not complete the basic two-year term before stepping down. Seo Won-joo's predecessor, Ahn Hyo-jun, is almost uniquely noted for successfully completing a two-year term and being reappointed twice for a total of four years.
Market participants argue that examples like "Ahn Hyo-jun's four years of service" should continue. A senior official from the asset management industry, who is a former National Pension employee, stated, "The Canada Pension Plan Investment Board (CPPIB), known as a benchmark model for the National Pension, does not set a fixed term for the CIO and ensures continued security for performance. We should not forget that the National Pension is responsible for the retirement of our citizens and must provide stability from the top in personnel decisions."