Special prosecutors said they raided National Pension Service (NPS) chairman Moon Hyung-pyo's home on Monday, before arresting him on Wednesday.
The NPS is the world's third-largest pension scheme.
It comes amid President Park Geun-hye's impeachment over the scandal involving her longstanding mentor Choi Soon-sil.
In the latest arrest, investigators are looking into NPS's support of an $8bn (£6.5bn) merger between two Samsung Group affiliates and whether Mr Moon used his influence as health minister at the time, to pressure it to back the deal.
The Ministry of Health and Welfare runs the pension service, which manages 545 trillion won ($451bn; £367bn) and was a major shareholder in Cheil Industries Inc and Samsung C&T Corp when they merged.
The NPS has denied previous reports that Mr Moon pressured the organisation to back the deal, and Mr Moon told reporters on Tuesday that he would cooperate with the investigation.
The scandal has also caught Samsung up in allegations that it backed foundations controlled by Choi Soon-sil in the hope of receiving political favours, which investigators are also examining.
Politicians voted on 9 December to impeach President Park - a decision South Korea's constitutional court has six months to uphold or overturn. Until then she remains formally president but stripped of her powers, which are handed to the prime minister, a presidential appointee.
Ms Park denies wrongdoing but has apologised for the way she managed her relationship with Ms Choi, who also denies committing criminal offences.

Mani Kurian, 50, of Eridge Road, Eastbourne, was convicted unanimously by a jury at Lewes Crown Court. He was also found guilty of five sexual assaults and one assault by beating.
A 21-year-old woman was raped as she walked on the upper promenade towards the pier in the East Sussex town at about 02:00 BST on 19 October 2014.
Court officials said Kurian would be sentenced on 26 February.

The US Anti-Doping Agency (Usada) said the 35-year-old failed to provide details of his whereabouts for testing on three occasions within 18 months.
He will be stripped of any result he achieved from 17 November, 2012, the date of his third failure to comply.
Gold: 2004 Olympic 200m, 2001 World Indoor Championships 200m
Silver: 2008 Olympic 200m, 2004 Olympic 4x100m relay, 2004 World Indoor Championships 60m
Bronze: 2001 World Championships 200m
But his agent said Crawford retired after missing out on London 2012.
Crawford failed to qualify for last year's Olympics after finishing seventh in the US trials final.
"He's 35 years of age, and has moved on," his representative Kimberly Holland told Reuters.  "Unfortunately, his announcement wasn't enough, as he had to complete retirement paper work to be removed from the testing pool."
Crawford also won silver in the 200m and the 4x100m relay at the Beijing Olympics.
When Usain Bolt won the first of his Olympic 200m titles in 2008, Crawford originally finished fourth, but was given the silver medal after Wallace Spearmon and Churandy Martina of Netherlands Antilles were disqualified for running out of their lanes.
Crawford later gave his medal to Martina, who would have been the first Olympic medallist from his country.
In 2003, he took part in a US television programme that saw him race against a zebra and a giraffe. He beat the giraffe but lost twice to the zebra after demanding a rematch following a false start.
Crawford won the Olympic 200m title in 2004, clocking a personal best of 19.79 seconds to defeat compatriots Bernard Williams and Justin Gatlin.
Usada said his ban would begin from 17 April, the date he received the sanction.
South Korea's pension fund head has been arrested in a probe into alleged corruption involving electronic firm Samsung and the country's president.
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A man has been found guilty of raping a woman near Eastbourne Pier.
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America's Shawn Crawford, the 2004 Olympic 200m gold medallist, has been banned for two years for not complying with out-of-competition drugs testing.