The Ministry of Economy and Finance decided to utilize the pension fund investment pool system for the operation of the lottery fund starting this year. The goal is to enhance asset management performance and stability by managing the lottery fund together with other funds through the pension fund investment pool.
According to the Ministry of Economy and Finance on the 29th, the Lottery Commission passed a proposal at the end of February to revise the related regulations on the complete delegation of lottery fund asset management. The proposal includes that "the fund participated in the complete delegation type of the pension fund investment pool" and "related decision-making is delegated to the Ministry of Economy and Finance investment pool operation committee."
The pension fund investment pool is a system operated by the government since December 2001 to enhance the professionalism and efficiency of fund asset management. It was introduced to address the problem that most funds, except for some large funds, lack a professional asset management system.
The pension fund investment pool integrates the surplus funds of various funds to achieve economies of scale. The entrusted scale has increased from 1.9 trillion won in 2002 to 62.1 trillion won at the end of last year. An asset management firm selected by the investment pool committee manages the assets, and the manager uses a fund of funds approach to incorporate sub-funds as assets within the integrated fund.
The Lottery Commission has been utilizing a method in which an internal asset management review committee selects entrusted management agencies and evaluates performance. However, to enhance professionalism and efficiency, it has decided to switch to a completely delegated method to the pension fund investment pool. Last year's lottery fund size was about 173.1 billion won, and if it flows into the pension fund investment pool exceeding 60 trillion won, economies of scale are expected to be realized.
A Ministry of Economy and Finance official noted, "We have been evaluating performance while entrusting the asset management firms, but considering profitability and risk assessment, a more professional approach is needed, and this was decided."
Meanwhile, it seems that the scale of the pension fund investment pool will further expand as the government has initiated reforms to expand it. The government is promoting a plan to allow public funds managed by public institutions and funds held by public agencies under the Public Ethics Act to be entrusted to the pension fund investment pool. Currently, it is limited to 67 funds under the National Finance Act, public institutions, local governments, and the Seoul Credit Guarantee Foundation. In addition, it will encourage more active utilization of the pension fund investment pool by revising the evaluation items for public institution management.
The government has also pursued the efficiency of the investment pool operation system. Currently, the weekly management firms selected by the government to replace the operation of the investment pool are primarily composed of asset management firms, but plans are being promoted to include securities companies as well. The allocation of points for performance evaluation, which determines whether to maintain or release the status of the weekly management firms, will also be increased to further enhance revenue.