NPS chief offers to resign over internal feud

Choi at odds with NPS chief investment officer

By Kim Jae-won

Choi Kwang NPS chairman

National Pension Service (NPS) Chairman Choi Kwang offered to resign, taking responsibility for an internal feud with the agency’s chief investment officer (CIO), the welfare ministry in charge of the agency said Wednesday.

Choi told Health and Welfare Minister Chung Chin-youb that he would soon step down from the post, according to the ministry. Choi has led the state pension fund for two-and-half years, since May 2013.

His resignation offer came a week after Choi notified Hong Wan-seon, CIO at the NPS, not to extend his two-year term, which expires on Nov. 3. Choi has been at odds with Hong over spinning off the fund management bureau.

The welfare ministry has pushed for separating the fund management bureau from the NPS, making it an independent agency. Hong supported the idea while Choi opposed it, suspecting Hong was behind the movement.

Market watchers said Choi, a retired economist, got the chairmanship thanks to his close relationship with Huh Tae-yeol, former chief of staff in Cheong Wa Dae. Both of them attended a high school in Busan and the University of Wisconsin.

Choi had also campaigned for President Park Geun-hye in 2007 when she sought to be the presidential candidate for the Grand National Party, the predecessor of the governing Saenuri Party. At that time, Park lost to former President Lee Myung-bak, but observers said his contribution helped him land the NPS job.

The sovereign pension fund was at the center of attention in July when U.S. hedge fund Elliott Associates opposed the merger of Samsung C&T and Cheil Industries. The NPS, the largest shareholder of Samsung C&T, approved the $8 billion deal while Elliott was against it, saying the plan hurt C&T shareholders’ interests.

The NPS is one of the largest pension funds in the world which manages 500 trillion won of funds, but its competitiveness lags behind its global rivals. Korea’s pension system was graded at D by the Melbourne Mercer Global Pension Index this year for getting poor scores in all three of its criteria ― adequacy, sustainability and integrity.

The Australian Centre for Financial Studies, which announces the index every year, recommended an increase in the level of support provided to the poorest pensioners as well as boost the minimum pension. The center noted that the country is one of two whose minimum pension has not increased at all, while all other countries saw theirs rise to some extent.