[Edaily Marketin JI YEONG-EUI Reporter Kim Yeon-ji] Baek Ju-hyun, the newly appointed Chief Investment Officer (CIO) responsible for managing the Private School Pension Fund’s financial assets—which total nearly 36 trillion won—will start his first day on the 22nd. While he inherits an unprecedented track record of double-digit returns for three consecutive years, observers note that he faces a heavy burden: he must validate the investment strategies expanded during the market uptrend and establish liquidity and market-downturn defense mechanisms to prepare for potential pension fund deficits.

According to the investment banking (IB) industry on the 21st, Director Baek will report for duty at the Private School Pension Service on the 22nd, where he will attend an inauguration ceremony and receive his letter of appointment to officially begin his term. Director Baek began his career in the financial sector at the Export-Import Bank of Korea in 1995. He moved to the Asset Management Division of Samsung Life Insurance in 2002 and was responsible for asset management for approximately 20 years. Through assignments such as a posting to Samsung Life Insurance’s New York investment subsidiary, he also gained experience in overseas investments, portfolio planning and management, and investment review.

After taking office as Head of the Fund Management Division at the Government Employees’ Pension Service in July 2022, he built a stable portfolio with one-third allocated to domestic and international bonds, one-third to stocks, and one-third to alternative assets. Under Director Baek’s leadership, the Government Employees’ Pension Service recorded an overall fund management return of 9.3% in 2023. The return on investment assets, excluding short-term funds, reached 11.5%—the highest level since 2006—and based on these results, Director Baek successfully secured a one-year extension of his term. Given his experience managing the Civil Service Pension Fund, where stability and liquidity are top priorities, there are high expectations that he will demonstrate his strengths at the Private School Teachers’ Pension Fund, which faces growing pressure to meet pension payment obligations.

The track record of the predecessor from whom Director Baek is taking over is impressive. The Private School Teachers’ Pension Fund posted double-digit returns for three consecutive years: 13.46% in 2023, 11.63% in 2024, and 18.93% in 2025. Its financial assets also grew from 21.5636 trillion won in 2023 to 35.9841 trillion won as of the end of May this year.

However, given that the recent strength of global stock markets and major domestic semiconductor stocks played a significant role, analysts say CIO Baek faces the challenge of distinguishing between returns driven by market rallies and those resulting from actual investment performance.

First, it appears necessary to assess the stability of the medium- to long-term strategic asset allocation for 2026–2031. The Private School Teachers’ Pension Fund has increased its allocation to domestic stocks by 1 percentage point and expanded its permitted volatility range by 2 percentage points to enhance its ability to respond to a bull market. However, the fund entered a phase of financial reversal in 2022, with pension benefit expenditures exceeding premium revenue. Although the overall financial balance remains in the black thanks to high investment returns, it is expected that going forward, it will be crucial to manage the portfolio not only to improve returns but also to ensure sufficient cash flow for benefit payments and maintain asset liquidity.

The effectiveness of expanding direct management is also being put to the test. The Private School Teachers’ Pension Fund adjusted the ratio of direct to outsourced management from 4:6 to 5:5 and relaxed investment limits on individual domestic stocks, thereby benefiting from the rise in large-cap semiconductor stocks. Going forward, it will be necessary to objectively determine whether direct management has actually led to excess returns relative to the benchmark or was merely the result of relying on the upward trend of specific sectors.

The ability to respond to bear markets is also expected to be a key evaluation criterion for Director Baek. Given that the fund has expanded its equity allocation and investment scope, it is necessary to refine stress tests and rebalancing systems that account for scenarios where domestic and international stock markets and exchange rates fluctuate sharply simultaneously. Liquidity management must also be strengthened to prevent assets from being sold at fire-sale prices during market crashes, should the call for alternative investment capital coincide with pension benefit payout periods.

Expanding the professional workforce to match the scale of assets under management is another challenge. Experts point out the need to reinforce specialized portfolio managers and risk management personnel for each asset class, as well as to clearly define decision-making authority and accountability in line with the expansion of in-house management.

Leading the organization with stability is a key task for Director Baek, just as important as delivering outstanding investment performance. It is reported that the chairman and management of the Private School Teachers’ Pension Fund deliberated carefully right up until the final stages of the CIO selection process, using not only investment capabilities but also the ability to communicate harmoniously with internal staff and manage the organization with flexible leadership as major criteria for their decision. Given the nature of pension fund management organizations, which rely on strong expertise across asset classes, the judgment is that inclusiveness—which secures the trust of members and stabilizes the organization—is a prerequisite for long-term performance, rather than unilateral, autocratic decision-making or coercion driven solely by performance targets. For Director Baek, building trust within the organization and preventing talent from leaving will be another important measure of his success, in addition to competing in the market.

An official in the pension fund management industry stated, “It will not be easy to adopt an approach that involves further increasing risk assets simply to match the high returns achieved under the previous administration,” adding, “The new CIO’s key challenges will include objectively verifying the performance of direct investments, establishing a system capable of controlling losses even during a pension fund deficit or a bear market, and ensuring internal trust through smooth communication with staff.”