Government Employees Pension Service: Asset Management Personnel Face Increasing Difficulty in Reemployment at Financial Institutions

[Asia Economy Reporter Park So-yeon] The Government Employees Pension Service (GEPS) has decided to strengthen internal controls related to the reemployment of executives and employees involved in asset management following the Audit Board's recommendations. Going forward, executives and employees who retire from GEPS must provide accurate information regarding their reemployment after retirement, and to prevent conflicts of interest, financial institutions employing former GEPS staff will find it difficult to be selected as entrusted asset managers or other custodial institutions.

According to the investment banking (IB) industry on the 27th, GEPS received criticism from the Audit Board last year for inadequately operating internal control systems related to the reemployment of executives and employees responsible for asset management after retirement.

The Audit Board instructed GEPS to thoroughly collect 'Consent Forms for Inquiry and Provision of Reemployment Information after Retirement' to verify whether asset management executives and employees have been reemployed after retirement, and to revise the form to allow for personal identification.

Additionally, the Audit Board issued a cautionary measure requiring GEPS to rigorously check for conflicts of interest to ensure that retired executives and employees do not get reemployed at financial institutions directly invested in by GEPS.

Accordingly, GEPS revised its internal control guidelines for asset management to require the collection and verification of a 'Certificate of Employment Status of Retired Employees at the Corporation' when selecting entrusted financial institutions.

Furthermore, the 'Consent Form for Inquiry and Provision of Reemployment Information after Retirement' within the internal control guidelines was amended to replace the date of birth with the resident registration number to enable precise personal identification.

Meanwhile, as of the end of last year, GEPS managed financial assets worth 8.1055 trillion KRW. The amount shrank to 7.6018 trillion KRW by the end of June this year but recovered to 8.7573 trillion KRW by the end of July. The rate of return has remained negative throughout this year: -2.0% in January, -1.6% in February, -1.2% in March, -2.3% in April, -1.8% in May, -4.5% in June, and -2.5% in July.