Comparative Study on the Regulation of Trustee Responsibility
Authors:   Asia-Europe Perspective Association, Ryu Keon-Shik , Lee Sang-Woo , Shin Moon-Shik 
Published: June 2018

Under relaxing asset management regulations and transition to advanced pension schemes, it is necessary to prepare regulations on fiduciary duties to prevent from abusing their discretion on pension fund. In case of relaxing asset management regulations, autonomy of financial institutions will be expanding. In addition risks related to asset management might be high if trustees' opportunities to operate increase. Especially, the transition from current contract-type pension governance to fund-type could bring to more fiduciaries' autonomy.
Trustees should have higher moralities and duties because retirement pension schemes have characteristics of social security to ensure stable retirement income. Therefore it is required to prepare explicit and proper institution for effective execution, aiming at protection for vests rights. And it is required to arrange systems to regularly monitor whether fiduciaries operates pension funds for employees' interests.
From this point of view, we first compare advanced countries' cases in terms of definition and scope of fiduciaries, their duties, regulations on fiduciaries' duties, monitoring system, and fiduciary liability insurance. Based on the these facts that we suggest measures to impove regulations on fiduciaries' duties in the long-term views.
In the retirement pension schemes trustees have so much discretion of its operation that adequate regulation on their responsibility are required to resolve conflicts of interest among employees. Comparing regulations on responsibilities of trustees, Korean trustee regulation is inadequate for other countries' regulation. This could have an negative influence on the protection of employees' vesting rights and early settlement of retirement pension schemes. Comparing regulations on trustees' responsibilities of advanced countries with Korean case, it is necessary to improve regulations on fiduciaries' duties in the following ways: clarification of trustees' responsibilities, monitoring systems on trustees, reinforcement of obligation on notification and disclosure, improvements of penalty on violation of trustees' responsibilities.
First, responsibilities of each interest groups such as employer, pension plan management companies, and asset management companies should be specified. Also, it is necessary to consider examining the introduction to fiduciary liability insurance to prepare suits related to trustees' responsibilities. In case of legislating enforcement ordinances and enforcement regulations, it is desirable that penalties, administrative measures, and compensation are differentiated according to each violation of fiduciaries' duties. Currently, it is impossible to issue Fidelity Bond because pension benefit guaranty corporation does not exists in Korea. In addition early introduction to fiduciary liability insurance is difficult because preparation procedures of property liability insurance company to deal with are unsatisfactory. However, regulator's supports are required to arrange voluntary fiduciaries' duties guideline.
Secondly, in order to enhance monitoring system on trustees it is required to strengthen third party monitoring by appointing and actuaries and auditors. Because there does not exists specific provisions on appointment and roles of actuaries and auditors in current retirement pension schemes, it should be stipulated by retirement pension Acts. In the U.S. actuaries registered taxation department confirm the part of pension mathematics for verification of policy reserve. Also, in the U.K. independent occupational pension regulatory authority, centered with pension actuaries, has been running to early detect soundness of pension fund.