National Pension Service Approves 1.3 Billion Won Budget for Appointment of Full-time Expert Committee Members (Comprehensive)

[Asia Economy Reporter Park Jihwan] The National Pension Service held a meeting of the Fund Management Committee, the highest decision-making body for fund management, and approved a budget of 1.3 billion KRW for the introduction of full-time expert members.

Cho Heungsik, Vice Chairman of the National Pension Fund Management Committee (President of the Korea Institute for Health and Social Affairs), said at the second meeting of the National Pension Fund Committee held on the morning of the 17th at the Plaza Hotel in Jung-gu, Seoul, "Today, we will finalize the necessary budget including the salaries for full-time expert members," adding, "After the agenda is approved, full-time expert members will be officially appointed, and subsequent procedures will proceed swiftly." He added, "We expect that a professional committee will be formed soon, leading to active, specialized, and independent discussions on fund management going forward."

At the meeting, the agenda item titled '2020 National Pension Fund Management Plan Amendment,' which focuses on establishing detailed projects to strengthen the expertise of the National Pension Fund management, was submitted and approved.

The budget of approximately 1.3 billion KRW includes personnel expenses such as salaries for full-time expert members and support staff, operating costs for the expert committee, and construction costs for office space installation. Specifically, a total of 632 million KRW was allocated for salaries for three full-time expert members and six support staff. Additionally, 355 million KRW was allocated for operating expenses such as expert committee operations and office rental fees, and 170 million KRW was allocated for office construction and equipment purchases.

The Fund Management Committee plans to promptly proceed with follow-up procedures such as appointing full-time expert members, hiring support staff, and installing office space according to the approved budget. Through this, they aim to enable the three expert committees on investment policy, fiduciary responsibility, and risk management & performance compensation to begin activities within this month.

However, due to delays in forming the fiduciary responsibility expert committee of the National Pension Service, it is highly likely that the National Pension's shareholder activities will be practically limited at this year's regular general meeting of shareholders in March. According to the Commercial Act, shareholder proposals must be submitted at least six weeks before the previous year's regular shareholders' meeting. Accordingly, the National Pension Service is expected to exercise voting rights corresponding to passive shareholder rights at this year's general meeting.

At a meeting with reporters after the Fund Management Committee meeting, Vice Chairman Cho Heungsik was asked whether shareholder proposals are practically impossible, to which he replied, "If the expert committee is formed quickly, it is uncertain," adding, "Although the budget was allocated today, there are many variables ahead, so it is difficult to comment at this time."

This budget approval is a follow-up measure prepared after the amendment to the Enforcement Decree of the National Pension Act was promulgated and enforced on the 29th of last month. According to the amendment, the National Pension expert committees will be operated separately as the Investment Policy, Fiduciary Responsibility, and Risk Management & Performance Compensation expert committees, each composed of nine members. Three full-time expert members will be appointed, one from each subscriber group (workers, employers, regional subscribers), recommended from qualified individuals, and will jointly participate in the three expert committees.