KOR

Research Staff

Research Staff

Song, Hong Sun Senior Research Fellow Fund&Pension

Profile

Publications

Overhauling Korea’s Trust Service Industry in the Era of Rapid Aging Senior Research Fellow Song, Hong Sun and others / Feb. 03, 2021
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Facilitating shareholder engagement in Korea Senior Research Fellow Song, Hong Sun / Feb. 21, 2018
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Demographic Changes and Stock Market: The OECD Experience Senior Research Fellow Song, Hong Sun and others / Feb. 08, 2017
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Opinion

2050 Carbon Net-zero and Climate Shareholder Activism / Apr. 20, 2021
As ESG management is gaining more ground towards carbon neutrality by 2050, more ESG investing is seeing the rise of climate activism as well as fiduciary activities directly targeting carbon issues. The rise of climate change as one of the shareholder activism strategies could be attributed to the systemic and non-distributable nature of climate change with high externality at a time when carbon regulation became one of the trade barriers affecting investment performance. The gist of carbon neutrality is to designate 167 “systemically important carbon emitters” who are responsible for 80% of global emissions, and to practice shareholder engagement based on Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Korea already pledged to reach carbon neutrality by 2050, which would further facilitate ESG management as well as carbon-related fiduciary activities. What is necessary is a regulatory overhaul for shareholder proposals and disclosures in a way that could leverage the current attention to large emitters to better shape the financial markets towards achieving carbon neutrality by 2050. Towards that end, it is more important now than ever for individual firms to engage more actively in reshaping their governance, carbon policy, and implementation strategies in line with ESG management.
Challenges for Regulatory Improvements on Private Fund Distribution / Oct. 27, 2020
Korea’s private fund distribution has Korea-specific features in investor qualification, investment recommendations, and sales channels. The recent cases of large-scale redemption freezes could have been the result of those features adversely affecting the efforts to help a customer-oriented sales process to take hold. Going forward, a bold policy action is required to break free from the repeated pattern of a crisis of confidence where private fund market inefficiency such as high information asymmetry is transferred to investors. What’s proposed is to scale down the “qualified retail investor” scheme while broadening the scope of the “professional retail investor” scheme. Also, it’s worth considering applying the current investment recommendation regulation to all retail investors regardless of whether they are professional or ordinary investors. With regard to the distribution channel, it is now time to review how large-scale channels and direct channels divide their roles as do other markets. What seems necessary at the current stage is a strategy to establish a direct channel via prime brokers that could provide systematic support to incubation funds for new asset managers, while existing large-scale channels reorganize their product lineup centering on private funds with proven track records in a bid to regain its reputation and confidence as a wealth management service provider.
Promoting Age-Friendly Financial Services in Korea: Future Directions / May. 26, 2020
As older adults aged 50 or over are expected to become the mainstream consumer segment of financial firms amid low fertility and population aging, a new service framework is needed to replace today’s financial services primarily targeting the working age population. Older adults and the working age population have different biological, economic, and behavioral traits. Physical and cognitive aging of financial consumers will call for renewed banking accessibility and preventive measures against financial abuse. Banking accessibility should be enhanced based on a new branch policy that supplements non-face-to-face services, whereas mobile monitoring and effective guardianship should take hold as a deterrent to financial abuse. Furthermore, aging is expected to push up demand for two areas: First, demand for drawdown products that shift household assets to retirement income streams; and second, demand for one-stop services to pass on property rights to descendants. As comprehensive trust services can meet the two lines of demand?asset management and transfer of property assets, this is expected to take hold as an important element to age-friendly banking in the future.
National Pension Reform from the Multi-Pillar Pension Perspective / Nov. 19, 2019
Korea’s state-run National Pension scheme has a partially-funded, pay-as-you-go element where the current generation benefits from contributions by the past generation. Under such an intergenerational structure, it’s desirable for policy objectives to prioritize intergenerational, contribution-benefit equity ahead of other factors such as concerns about old-age income security. The partially-funded structure could be understood as a buffer that helps smooth out the contribution burden and benefits across generations. As the multi-pillar pension scheme is beginning to take hold in Korea, it’s reasonable to take a multi-pillar perspective in judging the adequacy of post-retirement income security (the income replacement ratio), one of the National Pension’s fundamental objectives. In this regard, the reform on the National Pension scheme should prioritize the fund’s role as a buffer for financial sustainability. In addition to the gradual increase in premiums, it’s worth benchmarking the US Social Security 2100 Act to come up with other measures that could help delay the fund’ s depletion, e.g., raising the ceiling on pensionable earnings, transferring the income tax on state pension benefits back to the fund, etc.

Seminar Presentation