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The need to set a fiscal target and improve the fund governance structure of the national pension in Korea

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Frame of Image eed to Set a Fiscal Target and Improve the Fund Governance Structure of the National Pension in Korea Heesuk Yun, Fellow at KDI Dohyung Kim, Fellow at KDI Jonghoon Kim, Visiting Fellow at KDI Setting an explicit fiscal target in the pension system and implementing stronger fund governance are needed to address the concerns regarding the projected rise and fall of the National Pension Fund in Korea. Strengthening expertise and accountability of the fiduciaries is essential for a better governance structure, but their role must be confined by the mandate derived in part from the fiscal target of the pension system. Hence, setting the fiscal target, which provides a link between the pension system and pension fund governance, may be the first step to advancing the governance structure of the National Pension Fund. Ⅰ. Introduction The National Pension Fund (NPF) in Korea is expected to grow rapidly during the coming decades, rising from 10% of GDP to nearly 50% at its peak. Without major reform in the public pension system, the ongoing accumulation of the fund will be followed by an equally rapid decumulation phase. This projected rise and fall in the Fund's size KDI FOCUS 2 Enhancing expertise and accountability is imperative in reforming the governing body, which should be accountable for long-term investment performance necessary to meet the National Pension’s fiscal target. raises concerns over the capability of the current governing body to handle the outsized investments in


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Title The need to set a fiscal target and improve the fund governance structure of the national pension in Korea
Similar Titles
Material Type Articles
Author(English)

Yun, Heesuk; Kim, Dohyung; Kim, Jonghoon

Publisher

[Sejong] : Korea Development Institute
Date 2015
Journal Title; Vol./Issue KDI Focus:no. 55
Pages 13
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding KDI; KDI School
License

Abstract

Setting an explicit fiscal target in the pension system and implementing stronger fund governance are needed to address the concerns regarding the projected rise and fall of the National Pension Fund in Korea. Strengthening expertise and accountability of the fiduciaries is essential for a better governance structure, but their role must be confined by the mandate derived in part from the fiscal target of the pension system. Hence, setting the fiscal target, which provides a link between the pension system and pension fund governance, may be the first step to advancing the governance structure of the National Pension Fund.