[2025 Audit] Ruling and Opposition Parties Criticize National Pension Service's MBK Investment: "Contract Signed Despite National Assembly Warnings"

Possibility of 900 Billion Won Loss Based on Fair Value

The National Pension Service's decision on the 24th to select MBK Partners, a private equity fund manager, as an entrusted manager for pension funds has drawn criticism, with some arguing that "the responsibility for entrusting the public's retirement funds to a predatory private equity fund cannot be avoided." Critics pointed out that the National Pension Service signed the contract despite the National Assembly raising concerns about MBK Partners' management practices during last year's audit.

Baek Hyeryeon, a member of the National Assembly Health and Welfare Committee from the Democratic Party of Korea, stated during the audit held at the National Pension Service headquarters in Jeonju, North Jeolla Province, "Serious concerns were raised during last year's audit regarding MBK Partners' greedy and predatory acquisition and management methods. Nevertheless, in February of this year, the National Pension Service signed an entrusted management contract with MBK. Immediately after, in March, Homeplus, which had been acquired by MBK, filed for corporate rehabilitation," she pointed out.

Assemblywoman Baek emphasized that proceeding with the contract despite the National Assembly's warnings was not a simple mistake, stating, "MBK's acquisition of Homeplus was a leveraged buyout using the company's assets as collateral, and this ultimately led to the company's insolvency and rehabilitation. Employees at Homeplus stores are suffering, and the public is being harmed due to job insecurity and the collapse of local commercial districts," she stressed.

Previously, the National Pension Service invested 612.1 billion won in MBK Partners' acquisition of Homeplus in 2015. However, as Homeplus filed for corporate rehabilitation in March of this year due to a liquidity crisis, the possibility of losses has increased.

Kim Taehyun, Chairman of the National Pension Service, is responding at the National Assembly Health and Welfare Committee's audit held at the National Pension Service on the 24th. Photo by Yonhap News

Kim Taehyun, Chairman of the National Pension Service, stated, "The amount recovered so far, combining principal and profit, is 313.1 billion won, but based on fair value, there is a possibility of losses amounting to 900 billion won. Given the current situation with the corporate rehabilitation process, recovery is uncertain. Since the National Pension Service invested and losses have occurred as a result, we are responsible," he added.

The point was also raised that the National Pension Service should pursue not only returns but also ethical investments. Assemblywoman Baek said, "Public pension funds should not simply pursue profit, but must make ethical investments in line with ESG (Environmental, Social, and Governance) standards. The National Pension Service should resolutely avoid investing in predatory private equity funds that seek short-term profits by selling off assets," she emphasized.

When Assemblywoman Nam Insoon of the Democratic Party asked whether the National Pension Service intends to improve its approach to private equity investments, Chairman Kim responded, "There is a need to supplement the criteria for selecting investment managers," and added, "We will establish criteria to distinguish whether a manager's returns come from selling off assets or from growing the company."

In response to a related question from Assemblyman Seo Youngseok of the Democratic Party, Chairman Kim apologized, saying, "I regret that this outcome resulted from the investment decision regarding Homeplus at that time," and added, "We will ensure that such incidents do not recur, from the selection stage of managers through to the management process."

Meanwhile, regarding the introduction of an automatic adjustment mechanism to revise premium rates and pension benefits based on demographic changes, Chairman Kim stated, "From the perspective of sustainability, I believe it is necessary to consider introducing an automatic adjustment mechanism," but also cautioned, "We must discuss this carefully in light of income security and the elderly poverty rate."