Eight new alternative investment products reviewed for suitability

Total deposits surpass 96 trillion won; 145 depositing institutions

Security systems reviewed after Mirae Asset Global Investments breach

The alternative investment holdings of South Korea's pension investment pool — which manages funds from government accounts and public institutions — have grown roughly sixfold since the end of 2023, driven by rapid inflows into the National Growth Fund and the Innovation Growth Venture Fund. The expansion reflects a broader shift in how the pool allocates capital, with fund managers diversifying into new asset classes while also directing money toward economic growth priorities. The government said it will review its oversight framework and pursue regulatory improvements following a recent information security breach at the pool's lead asset manager.

The Ministry of Planning and Budget said it held the fourth meeting of the Fund Asset Management Policy Committee on Friday, chaired by Vice Minister Jo Yong-beom, to discuss the results of suitability reviews for new alternative investment products and measures to strengthen information security management at the pension investment pool.

Vice Minister Jo Yong-beom of the Ministry of Planning and Budget [Yonhap]
Vice Minister Jo Yong-beom of the Ministry of Planning and Budget [Yonhap]

The pension investment pool is a system established in 2002 in which surplus funds from government accounts and public institutions are pooled together and managed by professional asset management firms.

At Friday's meeting, the committee reviewed the suitability of eight new alternative investment products, including those under the National Growth Fund. The Ministry of Planning and Budget said the pool's growing focus on the National Growth Fund and the Innovation Growth Venture Fund marks a shift toward fund management that contributes to economic growth alongside improving returns.

The pool's alternative investment balance stood at 201.5 billion won ($151 million) at the end of 2023, rose to 273.6 billion won by end-2024 and reached 451.2 billion won by the end of last year, before jumping to 1.21 trillion won as of the end of October — roughly six times the end-2023 level.

Particularly notable was the growth in the National Growth Fund and the Innovation Growth Venture Fund, whose combined investment balance jumped from 20 billion won at the end of last year to 765.5 billion won by the end of October, accounting for about 63 percent of the pool's total alternative investment balance.

"We hope the pool will continue to faithfully uphold the core principles of fund management — stability, liquidity and profitability — while also serving as a catalyst to encourage private investment," Vice Minister Jo said.

The pool's total deposits have also expanded. From an annual average of 1.9 trillion won in 2002, deposits grew to 73.2 trillion won last year and reached 96.1 trillion won as of Wednesday. The number of depositing institutions has likewise grown, from 43 at the pool's launch in 2002 to 145 as of the end of October.

Amid the pool's expansion, information security has emerged as a pressing concern. The committee reviewed the circumstances of and response to a recent cybersecurity breach on the depositing-institution portal operated by Mirae Asset Global Investments, the pool's lead asset manager, and discussed measures to strengthen security.

Committee members said that although the lead asset manager is a private financial institution, it is held to a high standard of accountability and reliability given that it manages public funds including government accounts. They particularly urged each lead asset manager to conduct a comprehensive review of its information security management systems and take all necessary steps to prevent similar incidents, noting that cyber threats are growing more sophisticated amid advances in AI technology.

Going forward, the Fund Asset Management Policy Committee plans to continuously review areas requiring stronger oversight — including information security — and pursue necessary regulatory improvements.

"As the scale and role of the pension investment pool continue to grow, it is important to build the operational expertise and management systems to match," Vice Minister Jo said. "I ask that private committee members actively share their views on institutional improvements and the direction of development, drawing on their extensive expertise and experience, so that the investment pool can continue to advance."


y2k@heraldcorp.com