Rival parties clashed over the National Pension Service's decision to postpone rebalancing its asset weightings during a parliamentary audit of the fund at the National Assembly's Health and Welfare Committee. The People Power Party alleged that the government mobilized the NPS to prop up share prices ahead of local elections in June, demanding the release of minutes from the fund management committee and the appearance of Kim Yong-beom, former chief of presidential policy, as a witness. The Democratic Party of Korea pushed back, saying the demand amounted to attacking their own record, while the People Power Party said it would not rule out a parliamentary investigation if its request for the minutes is rejected.
Rep. Baek Jong-heon, the People Power Party's liaison on the Health and Welfare Committee, said at the audit of the NPS on the 14th that the party had repeatedly requested Kim's designation as a witness but that the Democratic Party never agreed. "That has blocked the chance to ask directly the person who oversaw government policy at the time why the National Pension Service broke with its principles and delayed rebalancing, and who decided to allow single-stock leveraged exchange-traded funds and through what process," Baek said.
At issue for the People Power Party is whether the decision to postpone rebalancing was tied to the government's policies to lift the stock market. When domestic share prices rise and push the NPS's equity holdings above target levels, the fund is required to adjust those weightings under its asset allocation guidelines. The opposition argues that pressure to sell domestic stocks eased after the fund management committee decided in January this year to suspend rebalancing. The People Power Party also suspects the decision may have affected efforts to boost share prices ahead of the local elections and to create market conditions for the introduction of single-stock leveraged ETFs.
The People Power Party pressed for the release of the fund management committee's minutes to establish the background to the postponement. "The suspension of rebalancing was approved by the fund management committee in January this year, but the committee also resolved to withhold the minutes until 2030," Baek said. "Under the National Pension Act, however, the minutes can be submitted if the relevant standing committee of the National Assembly requests them." He urged the Democratic Party to cooperate with the request and raised the possibility of a parliamentary investigation.
Criticism also continued over the independence of the fund's management. "The National Pension Service is not a fund for propping up the stock market on behalf of the administration," said Rep. Lee Dal-hee of the People Power Party. "Not a single person would consider it independent of political power, given how the NPS chairman responds to a single remark from the president by changing investment guidelines."
NPS Chairman Kim Sung-joo countered that the suspension was a reasonable decision given stock market conditions at the time. "If you go back to the market conditions in January and May, there were experts recommended under the Yoon Suk-yeol administration as well, and there was no objection to suspending rebalancing," the chairman said. "That was because we took an optimistic view of the Korean stock market."
The chairman also rejected suggestions that the government intervened in fund management. "I have never experienced a case in which the government's requests simply passed through as they were," he said. "The rules on disclosing the minutes are a law created under the Park Geun-hye administration."
The Democratic Party countered that the NPS had not lifted the market by buying additional shares, but that the need for rebalancing arose because the value of stocks it already held had risen. "It would actually have been better to rebalance before the local elections and make use of the returns," said Rep. Lee In-young of the Democratic Party. "The National Pension Service did not prop up the market by buying stocks. Rebalancing came up for discussion because the value of the stocks it had already purchased went up."
The two sides also split over the demand to disclose the fund management committee's minutes. "The witness request does not fit the purpose of a parliamentary audit, and this is not a matter for our committee to summon a witness and take up separately," said Rep. Seo Young-seok, the Democratic Party's liaison on the Health and Welfare Committee. "The rules on disclosing the minutes were created by the National Assembly in 2013, with a four-year exception for matters related to market stability."
Seo argued in particular that the demand ran counter to the institutional purpose of market stability. "Demanding that the minutes be released now is like spitting while lying down," he said. "If the suspension of rebalancing was an important enough decision to move the market, then it is a matter that could affect financial market stability, so the argument that the minutes should be disclosed does not hold."