[Edaily Marketin, Reporter JI YEONG-EUI ] It has been confirmed that, during the initial planning stages for managing surplus funds from the Future Response Fund—worth over 100 trillion won—the government considered entrusting the task to the Korea Investment Corporation (KIC), but the plan fell through due to disagreements among government ministries. It is understood that the fact the Ministry of Planning and Budget could participate in the KIC’s steering committee if it were entrusted with large-scale funds served as a source of conflict with the Ministry of Finance and Economy. In essence, the issue of inter-ministerial control became a stumbling block in the process of determining how to manage the massive fiscal funds raised from taxpayers’ money.

Plan to Entrust 100 Trillion Won Failed… Right to Participate in Steering Committee Proved a Stumbling Block

According to investment banking (IB) industry sources and government officials on the 21st, the Ministry of Planning and Budget considered entrusting surplus funds in the 100 trillion won range to the KIC during the initial design phase of the Future Response Fund’s management system. However, reports indicate that the plan was not adopted because the Ministry of Finance and Economy expressed reservations regarding the distribution of decision-making authority within the KIC. The KIC is also said to have taken a negative stance toward the Ministry of Planning and Budget’s entrustment proposal.

The core of the conflict centered on participation rights in the KIC Steering Committee. According to Article 10 of the Korea Investment Corporation Act and Article 2 of its Enforcement Decree, the head of any institution that entrusts assets worth 1 trillion won or more to KIC becomes a member of the KIC Steering Committee. The Steering Committee is the highest decision-making body responsible for deliberating and resolving major matters, including investment policies, asset management directions, and budgets and financial statements.

Under this structure, if the Ministry of Planning and Budget were to entrust a large portion of the Future Response Fund’s surplus funds to KIC, it could lead to changes in the composition of the Steering Committee. From the Ministry of Finance and Economy’s perspective, the prospect of the Ministry of Planning and Budget newly participating in KIC’s decision-making process—in which it had previously been involved—was seen as a burden.

A government official stated, “We did consider a plan to entrust surplus funds from the Future Response Fund to KIC, but the situation could have become complicated due to the issue of participation rights on the Steering Committee,” adding, “KIC also found this burdensome, and ultimately, the entrustment plan fell through.”

500 billion invested in the sovereign wealth fund… Management plan for 100 trillion still undecided

The Future Response Fund established by the government for fiscal year 2027 totals 162.3 trillion won. Of this amount, 104.4 trillion won has been allocated as surplus funds to be managed in preparation for future expenditures. The plan also includes a 500 billion won investment in a Korean-style sovereign wealth fund (Strategic Investment Account) to be established separately within KIC.

However, this is an investment intended for strategic industries and is different in nature from entrusting the Future Response Fund’s surplus funds to KIC for management. In effect, while contributing a portion of the operating funds to KIC, the government is separately reviewing how to manage the large-scale surplus funds.

The Ministry of Planning and Budget is currently comparing options, such as selecting a separate external Outsourced Chief Investment Officer (OCIO) or utilizing existing pension fund investment pools. Minister of Planning and Budget Park Hong-geun met with reporters on the 21st and stated that the fund’s profitability, safety, and expenditure needs must be comprehensively considered, adding that the management method has not yet been decided.

The issue is this: if the option of utilizing existing public investment managers was ruled out due to inter-ministerial conflicts of interest, were operational efficiency and costs sufficiently evaluated? Depending on the institution entrusted with managing the large surplus funds, management fees, risk management systems, and oversight methods could vary. This is why it is necessary to verify whether the distribution of authority among ministries took precedence over the fund’s investment objectives.

In response, the Ministry of Finance and Economy and the Planning and Budget Office denied the claim, stating, “We have neither reviewed nor discussed the plan to entrust (the Future Response Fund’s surplus funds) to KIC.”