Home > News > Newsmakers > Former Korean Minister Found Guilty of Pressuring Pension
Newsmakers

Former Korean Minister Found Guilty of Pressuring Pension

Ex-health minister sentenced to 2 ½ years for leaning on national pension to approve controversial Samsung merger.

By Michael Katz

South Korea’s former health minister was found guilty of pressuring the nation’s pension fund to support a Samsung merger that had been criticized for being overly beneficial to the company’s founding family.

The Seoul Central District Court sentenced Moon Hyung-Pyo to 2 ½ years in prison for putting pressure on the state-run National Pension Service (NPS) to give its approval to a 2015 merger between two Samsung subsidiaries.

“The fact that a Health Ministry official used pressure to damage the independence of the state pension fund is highly reproachable,” the judges said after finding Moon guilty, reported the Yonhap news agency.

The charges against Moon stem from the 2015 merger of Samsung C&T and Cheil Industries, which was seen as vital to the company’s familial leadership succession. However, the proposed merger was unpopular among a significant contingent of Samsung shareholders who criticized the deal for being unfairly beneficial to Samsung’s founding family members.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

As the $508 billion NPS is a major investor in Samsung, the pension fund’s blessing was key to winning shareholder support of the merger. And the pension’s vote turned out to be the difference in the merger getting the green light.

Moon, who as head of the Health Ministry oversaw the National Pension Service, was found guilty of violating the pension’s independence by abusing his power to influence the fund’s vote. He was also found guilty of perjury during a parliamentary hearing for lying about his role in the merger.

Hong Wan-sun, a former head of the NPS’ operation division, was also found guilty and was sentenced to 2 ½ years in prison for causing damages to the fund by convincing its investment committee to support the merger. The court said Hong recommended merger approval despite knowing the merger ratio was unfair to Samsung C&T shareholders, and would therefore damage the pension fund’s stake in the construction company.

The controversy over the Samsung merger, and the allegations that the pension service was pressured to support it, helped contribute to the corruption scandals that led to the impeachment of Park Geun-hye, the former president of South Korea.

Tags: , , , ,

Home > News > Research > UK Workers Expect to Retire Early, But May Not Be Saving Enough
Research

UK Workers Expect to Retire Early, But May Not Be Saving Enough

Study finds younger workers are overly optimistic about when they will stop working.

By Michael Katz

A new report from insurance company Prudential says British workers expect to retire well before state pension age, but they may be disappointed as one in 10 won’t begin saving for retirement until they are 46.

“As people’s retirements get longer, the responsibility for funding them will shift even further towards individuals,” said Vince Smith-Hughes, a retirement income expert at Prudential. “Pensions are about saving for the long term, so the best way for most people to secure a comfortable retirement is to save as much as possible from as early as possible in their working life.”

Prudential’s “Intergenerational Retirement Study,” which investigated the retirement preparations of different age groups across the country, found that 11% have yet to start saving into a pension, and the average starting age for those who are saving for retirement is 27. 

The study also found that most workers in the UK expect to retire before the state-mandated pension age; and younger workers expect to retire much earlier than older workers – almost twice as early. Workers between ages 21 and 30 expect to retire seven and a half years before they reach pension age, while workers between ages 51 and 65 expect to retire just over four years before pension age or less.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

“For many people with a specific retirement date in mind, it is likely that a consultation with a professional financial adviser will help to put a savings plan in place to make sure they meet that goal with sufficient savings in their pension pot,” said Smith-Hughes.

According to the study, 53% of workers under the age of 40 estimate that their retirement incomes will be equal to or below the average incomes of those retiring in 2016. “This means that people who are anything up to 45 years away from retirement are expecting to be able to live on £17,700 or less per year,” said the report, “which of course will be worth considerably less in real terms, when they give up work.”

Prudential’s research also revealed that younger workers aren’t as confident about their retirement prospects as their older counterparts are. Approximately18% of workers under the age of 50 said they are worried that their savings aren’t on track, and that they’ll have to work past their desired retirement age. Another 37% said they fear they have only saved enough to just get by in retirement. Meanwhile, 87% of workers aged 51 to 65 say they are on track to retire when they planned to, the majority of whom expect to live a comfortable retirement.

“The desire to retire as early as possible is completely understandable,” said Smith-Hughes. “But with life expectancies increasing all the time, and the average retirement now lasting over 20 years, it is unlikely to be achievable for everyone.”

 

Tags: , , ,

«