Gambling with Pensions
“We are planning to raise the overseas and alternative investment ratio from 25 percent at the end of last year to 37 percent by 2017. In order to do so, we have divided the existing foreign investment team into two divisions – Team 1 for stocks and bonds and Team 2 for alternative investment – to increase specialty,” the Korea Teachers Pension Chairman Kim Hwa-jin said during a press conference held in Yeouido, Seoul, on Sept. 10.
Kim also came up with the plans to hire more employees to strengthen its fund management ability as well as reorganization. He said, “Recently, we have employed a worker who has a lot of experience in the overseas alternative investment sector. Since the specialty matters the most in the sector, we are planning to hire more talent in the future.” The Korea Teachers Pension recruited a management-level employee from CBRE, the world's largest commercial real estate services firm, for foreign investment Team 2 in early Aug.
It will also strengthen the voting rights for investment targets. Kim said, “Since the size of funds is not that large, the share rates of domestic firms are mostly less than 1 percent. Considering public concern, however, we are responsible for protecting the rights and interests of shareholders by exercising our vote. In fact, we voted against the reelection of the non-executive director last year with regard to the expensive purchase of the Korea Electric Power Corporation site by Hyundai Motor.”
Meanwhile, the total assets of The Korea Teachers Pension as of the end of Aug. amounted to 15.88 trillion won (US$13.39 billion), divided into 51.4 percent bonds, 31.5 percent stocks, and 14.9 percent alternative investment. Its return on assets as of the end of June stood at 4.1 percent.