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[garykasparov]

Gov't Grabs the Reins of National Pension Service Again

After just two months, the government has reversed its decision to entrust the operation of the National Pension Service funds in the hands of an independent, private apparatus. When it announced its plan to reform the NPS in September, the government said it would make its fund operation completely independent by filling its highest decision-making body with private sector experts from the finance and investment sectors. At present, the fund management committee is attached to the Ministry of Health and Welfare and is composed of members from government ministries, as well as representatives from pension subscribers, pensioners and labor groups.
At the time, the government said its reform measures were aimed at protecting the interests of subscribers by enhancing independence, expertise and freedom of fund management at the NPS. The government said that if it participated directly, it could end up harming subscribers like it did during 1994 to 2000 by using W39 trillion (US$1=W916) of the pension fund for public spending. That decision drew applause from the public.

But that same government stealthily switched the reform plan into one where the fund management committee at the NPS falls under the direct guidance of the president. The reason behind the shift is that finance-related government ministries and civic groups opposed the government�s plan to entrust such a huge amount of funds to a group of civilians. The government says the operation of the fund will be entrusted to private sector experts, so independence will still be guaranteed.

The government says it will ensure the expertise of operating the fund, but that�s hard to believe. Realistically, it would be difficult to expect private sector experts who have been appointed by the president to act according to their own convictions without worrying about the top office. In the end, the government�s intention of tapping into NPS funds to spend on social infrastructure projects may become a reality.

Canada, New Zealand and Ireland, which recently implemented pension reforms, formed independent fund management committees, removing government interference. This is the trend that�s happening around the world. Canada even made it a law that investment committees composed of private sector experts at state pension funds are not part of the federal government. Ireland even prohibited state pension funds from purchasing government bonds in order to ensure their independence. Our government must keep its original promise to make the NPS independent.


http://english.chosun.com/w21data/html/news/200711/200711160024.html