The National Assembly's Health and Welfare Committee conducted a parliamentary audit of the National Pension Service (NPS) on October 14, focusing on the controversy surrounding the delay in rebalancing asset allocations that occurred earlier this year.
The ruling People Power Party (PPP) accused the government of mobilizing pension funds to support the domestic stock market ahead of the upcoming general elections, demanding the immediate release of meeting minutes from the fund management committee. In contrast, the opposition Democratic Party (DP) defended the decision as a normal operation aimed at stabilizing the market.
During the audit, which included NPS Chairman Kim Seong-joo, lawmakers engaged in a heated debate over the fund management committee's decisions made in January and May to increase the target allocation for domestic stocks and postpone mechanical selling (rebalancing). The opposition questioned whether there was political pressure influencing these decisions, while the ruling party refuted such claims.
Opposition Claims Political Pressure Influenced Rebalancing Delay
The PPP opened the session with a statement from lawmaker Baek Jong-heon, who criticized the Democratic Party for blocking the selection of key witnesses, including former Blue House policy chief Kim Yong-beom. He urged for the immediate submission of the fund management committee's meeting minutes, arguing that the decision to release them in 2030 obscured how pension funds were managed.
Another PPP lawmaker, Lee Dal-hee, highlighted the correlation between presidential remarks and the committee's decisions, suggesting a theory of political intervention. He noted that President Lee Jae-myung had repeatedly mentioned the low allocation of domestic stock investments during various public events, which coincided with the committee's decision to change investment guidelines. He argued that the delay in rebalancing provided an opportunity for foreign investors to sell at high prices, ultimately harming individual investors.
Additionally, lawmaker Jo Bae-sook pointed out that the committee's structure, which includes five government officials led by the Minister of Health and Welfare, makes it susceptible to government influence. She characterized the delay in rebalancing as a deliberate decision to prop up the stock market.
Ruling Party Defends Delay as Necessary for Market Stability
In response, the DP defended the rebalancing delay as an unavoidable decision to minimize market shocks. Lawmaker Seo Young-seok argued that the request for meeting minutes was based on legal provisions that require certain documents to remain confidential for four years if they could impact the fair execution of fund management or financial market stability. He dismissed the call for transparency as counterproductive.
DP lawmaker Lee In-young explained that the delay was not an additional purchase of stocks but a measure to prevent a market crash due to mechanical selling from the appreciation of existing holdings. He emphasized that large-scale selling at market peaks could have severely impacted the fund's returns.
Another DP lawmaker, Kwon Chil-seung, criticized the practice of judging past investment decisions solely based on their outcomes, arguing that it is unreasonable to expect accurate predictions in a volatile market.
Chairman Kim Seong-joo Denies Government Intervention
Amid the intense debate over alleged political pressure, Chairman Kim Seong-joo firmly denied any government involvement. He stated, "The fund management committee operates with representatives from various sectors, and I have never experienced a situation where government directives were simply approved."
Regarding the decisions made in January and May, Kim explained that the committee unanimously agreed to delay rebalancing based on optimistic assessments of the Korean stock market from both domestic and international securities firms. He acknowledged concerns about the high proportion of government representatives on the committee and expressed support for expanding the representation of contributors in future governance reforms.
* This article has been translated by AI.
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