South Korea to use its pension fund to attract foreign financial firms

Several regulatory changes lined up as government seeks more foreigners to work with top-three global pension service

South Korea to use its pension fund to attract foreign financial firms

Insurance News

By Gabriel Olano

The Financial Services Commission of South Korea is planning to leverage its National Pension Service (NPS) to attract more foreign financial companies to enter the market. The NPS is one of the top three largest pension funds in the world, with KRW544 trillion (US$462 billion) in assets.
The NPS will choose from companies that have subsidiaries, branches, or offices in Korea or provide incentives to companies in choosing its fiduciary overseas investment managers. Several restrictions applying to foreign firms will also be lifted. Previously, firms needed to have a support team for each field they were engaged in, such as banking, insurance, securities, etc. Also, executives were barred from holding more than one position.
With the proposed change, a subsidiary’s support team can provide assistance to another subsidiary. Executives will also be allowed to hold multiple posts.
Currently, around 24% of the NPS’s assets are invested overseas in bonds, stocks, real estate, and infrastructure. Some 167 foreign financial companies, including Goldman Sachs, Morgan Stanley, and Franklin Templeton, currently have fiduciary management contracts with the NPS.
According to the Financial Supervisory Service, there are 48 international investment banks and asset managers operating in the country. With the proposed changes to the NPS, around 100 more financial institutions are expected to join the Korean market.

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