The National Pension Service of South Korea (NPS) has modified its operating rules to specify qualifications needed by external experts who participate in its selection committee for mandate awards, after concerns were raised by the state audit agency.

According to the revised rules, which took effect on October 27, external members of the selection committee need one of the following qualifications: more than five years of experience in investing or corporate finance; experience in teaching at universities or working at research institutes with a doctoral degree in economics or business administration; certified public accountants or lawyers; and those who manage funds at other domestic and overseas institutions such as pension funds, sovereign wealth funds and credit unions.

The changes, which were announced on Friday (November 6), also state that civil servants and anyone employed by the NPS cannot participate on the committee.

NPS was responding to comments by the Board of Audit and Inspection, which urged the pension fund to improve its process for appointing external members to the selection committee for mandate awards. The agency said in its audit report on July 30 that there were concerns about transparency in regard to the choice of external experts due to a “lack of clear qualifications” required for membership of the committee.

NPS forms a selection committee when it starts a tender process to award investment mandates that has seven members, including the fund’s chief investment officer. According to the rules, external members should make up more than half of the committee for domestic investments, while the committee for overseas investments should include at least one external expert. (Reporting by Hee-yeon Han)