In the future, funds established under individual laws, like the Supply Chain Stabilization Fund, and public organizations that perform government functions with government investment, grants, and subsidies, such as the Fire Industry Mutual Aid Association, will also be able to entrust their surplus funds to the pension fund investment pool. This expands the investment targets that were previously allowed only for government funds, public institutions, the Seoul Credit Guarantee Foundation, and local governments (LGs). The public institution management evaluation criteria will also be expanded and reorganized to encourage more active utilization of the pension fund investment pool.
The Ministry of Strategy and Finance disclosed a plan titled 'Enhancing performance and diversifying the operations of the pension fund investment pool' during the National Policy Council meeting and the Economic Relations Ministers' meeting on the 12th.
The pension fund investment pool refers to the integration (pooling) of surplus funds from government funds, which are entrusted to professional management firms for asset management. As of last year, 61 funds and 54 public institutions have deposited 62.1 trillion won. Instead of just keeping surplus funds in cash, the system was introduced in the mid-2000s to generate more revenue through 'economies of scale', but despite various efforts for institutional improvement, it has been pointed out that entrustments are not being activated.
In response, the government has prepared a restructuring plan to expand the scale of the pension fund investment pool and increase revenue. First, it has decided to more actively encourage the entrustment of investment pools in the public institutional sector. One of the indicators for public institution management, 'Financial Budget Management' (3-4 points), will add the item 'Efficient asset management through the activation of cash asset deposits in the pension fund investment pool.' Although there was a similar item previously, it is interpreted as a commitment to reflect this more actively.
Additionally, the current entrustment targets of the pension fund investment pool, limited to 67 funds, public institutions, local governments, and the Seoul Credit Guarantee Foundation under the National Finance Act, will be further expanded. Funds established under laws managed by public institutions and funds held by public interest organizations under the Public Officials Ethics Act will also be permitted. Like the Supply Chain Stabilization Fund established under the Supply Chain Stabilization Act, public interest organizations such as the Rural Youth Development Foundation and the Fire Industry Mutual Aid Association will be able to entrust surplus funds provided the initial entrustment amount is over 10 billion won.
Efforts will also be made to streamline the management system of the investment pool. Currently composed mainly of asset management firms, the investment pool management firms (selected by the government to manage the investment pool) will include 'securities firms' as well. The weight of 'performance evaluation' used to determine whether to maintain or terminate the status of investment pool management firms will also be increased to enhance revenue.
To enable fund management agencies to actively invest in 'high-revenue medium- to long-term assets', a new evaluation criterion for the adequacy of asset allocation will be established during fund assessments. The review process will be shortened to allow timely investment in alternative investment products, and investments in dollar MMFs (short-term financial products) and domestic equity and bond ETFs (Exchange-Traded Funds) will also be permitted to diversify the investment product range.
The Ministry of Strategy and Finance stated that it plans to swiftly implement the tasks included in this restructuring plan, and for tasks that can be immediately addressed, actions will be taken within the first half of the year after approval by the Investment Pool Operating Committee and amendments to relevant regulations such as the pension fund investment pool operating regulations.