HF expands investment pool of public pension fund

On November 19, 2010, Housing & Finance (HF, CEO Joo-jae Lim) announced the cancellation of the limit on the investment pool of the public pension fund. Previously, the ceiling was set at 10 percent of the idle money in the Housing Finance Credit Guarantee Fund. The cancellation of the limit will likely lead to a diversification of investment methods and an increase in yields. 

The investment pool of the public pension fund refers to the investment system that brings together idle money from different funds and public institutions in order to create a fund of funds for investments. HF was allowed to deposit up to 10 percent of its idle money in the investment pool of the public pension fund, and invested the rest in time deposits, installment deposits, and bonds (mostly government and public). 

With the cancellation of the limit, HF plans to double or triple its investment pool in the public pension fund, which currently stands at about 180 billion won. Once the investment pool is increased, it is projected to drive up the earnings rate by roughly 0.5%p.

 “Thanks to the action taken by the Financial Services Commission, it became possible for us to use idle money in a more flexible manner,” said an HF official. “In principle, safety should be a top priority when operating a public fund, but it is equally important to increase the profitability through effective risk management."