Democratic Party lawmaker Park Seon-won submitted a National Pension Act amendment bill on the 6th to allow temporary suspension of asset rebalancing during market volatility. The legislation addresses concerns that the National Pension Service's mechanical rebalancing could trigger mass stock sell-offs amid the KOSPI surge. Current law sets fixed target ratios for asset classes but lacks explicit authority to adjust ratios or pause trading in response to market conditions.
Bill Establishes Temporary Suspension Authority for Asset Trading
The amendment allows the Ministry of Health and Welfare to adjust target asset allocation ratios and temporarily suspend asset sales or purchases when financial or foreign exchange markets experience rapid fluctuations. These measures apply only within limits that do not harm the long-term stability and profitability of the National Pension Fund. The bill includes provisions for the Fund Management Committee review and National Assembly oversight.
![Democratic Party lawmaker Park Seon-won at National Assembly press conference]()
Democratic Party lawmaker Park Seon-won announces candidacy for Supreme Council member at National Assembly communication center on the 24th. Photo: Yonhap News
Parliamentary Reporting Requirement Included in Amendment
When the Ministry of Health and Welfare implements target ratio adjustments or trading suspensions, the minister must report to the relevant standing committee of the National Assembly without delay. This reporting mechanism establishes a post-implementation control system for parliamentary oversight of fund management decisions.
Current Law Lacks Flexibility for Market-Responsive Adjustments
Under existing National Pension Act provisions, the Ministry of Health and Welfare prepares annual fund operation plans that undergo review by the National Pension Fund Management Committee and the Cabinet before receiving presidential approval. These plans specify target ratios for domestic stocks, foreign stocks, bonds, and alternative investments. The recent KOSPI surge expanded the National Pension Service's domestic stock holdings beyond target ratios, raising concerns that mechanical rebalancing to restore target allocations could cause market disruption through large-scale stock sales.
Lawmaker Cites KOSPI 8000 Era and Long-Term Fund Stability
Park stated that "with the KOSPI 8000 era opening, the existing mechanical rebalancing method has limits in responding to rapidly changing markets." He added that "mechanically selling to meet short-term target ratios in high-return markets is not desirable for citizens' retirement funds." Park emphasized that "this amendment does not permit arbitrary management, but rather clearly establishes in law the basis for necessary adjustments premised on Fund Management Committee review and National Assembly reporting." He concluded that the bill aims to "reduce excessive concerns about mechanical rebalancing and protect the long-term profitability and stability of National Pension retirement funds."
FAQ
What did Park Seon-won propose on the 6th regarding National Pension rebalancing?
Park Seon-won submitted a National Pension Act amendment bill allowing temporary suspension of asset sales and purchases during periods of rapid financial or foreign exchange market fluctuations. The bill permits the Ministry of Health and Welfare to adjust target asset allocation ratios within limits that preserve long-term fund stability and profitability.
Why does the current National Pension Act lack flexibility for market adjustments?
Existing law requires the Ministry of Health and Welfare to set fixed annual target ratios for asset classes through a process involving Fund Management Committee review, Cabinet deliberation, and presidential approval. The law does not provide explicit legal authority to adjust these ratios or pause trading in response to market conditions, creating concerns about mechanical rebalancing causing market shock during the KOSPI surge.
How does the amendment establish oversight for National Pension fund management decisions?
The bill requires the Minister of Health and Welfare to report any target ratio adjustments or trading suspensions to the relevant National Assembly standing committee without delay, creating a post-implementation parliamentary control mechanism for fund management decisions.
