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Korea’s Pension Service Faces Management Crisis

By February 13, 2017 at 7:09 am
General Views Of The National Pension Service As Korea Pension Tests Chaebol Tolerance By Opposing Mando CEO (Photo : SeongJoon Cho/Bloomberg via Getty Images)

Korea's National Pension Service or the NPS is currently facing management crisis because of a scandal involving President Park Geun-hye and its involvement in its merger with Samsung.

Because of the management crisis that the service is encountering right now, there are increasing calls for the unit to conduct an independent investment management unit. This has been raised after a growing number of employees are planning to leave the institution.

According to Korea Times, there have been 50 employees already who left the company the past year because of these controversies involving the service. These scandals include the Samsung affiliate merger and the plan to relocate the fund's headquarters to Jeonju in Southern Korea at the end of the month.

This scandal has fuelled uncertainties over the National Pension Service ability to handle and administer 500 trillion won for the people's retirement. Most of its employees have started to lose trust on the management most especially when these scandals escalated in the company.

Two of the most outspoken critics of the NPS have asked for change on the methods the funds should be managed as per Bloomberg. Kin Sang-jo, an economist shared that the fund should do its responsibility to deal with investment concerns and troubles.

Meanwhile, the other critic, Jang Ha-sung emphasized his observation over a huge misconception as to the owner of the NPS. He made mention that this is owned by the government and that the chaebol should not be the owner of conglomerates as they do not have any share in the company.

According to Jang, "We commonly think that Lee Boo-jin is the owner of Hotel Shilla. She does not own any shares in the company. Its biggest shareholder is the NPS and, therefore, the public is the major investor in the hotel."

This management crisis which the NPS faces these days is also affecting the Korean economy. A lot concluded that the confusion over the ownership of chaebol and the management of NPS is brought about by poor governance.

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