National Pension Fund’s headquarters in Jeonju, North Jeolla Province
South Korea’s largest institutional investor, the National Pension Service (NPS) managing assets of 1,150 trillion won ($870.6 billion), struggles to recruit investment managers, raising concerns about the quality of its fund management capability.
According to NPS data obtained by Kim Sun-min, a lawmaker of Korea’s Rebuilding Korea Party, on Tuesday, the numbers of the National Pension Service Investment Management’s staff stood at 362 as of the end of June, falling 53 short of its annual job quotas.
These are the largest unmet vacancies in the investment arm of NPS, also the world’s third-largest pension fund, since 2017 when the NPS Investment Management relocated its headquarters to Jeonju, North Jeolla Province, 240 kilometers south of Seoul, from the capital of Korea.
The NPS investment arm failed to hire 34 employees in 2017, more than doubling from 2015 when 15 jobs remained unfilled. The understaffing increased to 49 in 2022 and then fell to 28 in 2023.
The NPS shrugged off its investment staff shortage as a one-off phenomenon following an increase in the annual staff quota to 415 this year from 365 last year.
REMOTE LOCATION AND LOWER SALARY
But others attributed the national fund manager’s chronic understaffing to the relocation of its main office from Seoul to Jeonju, a remote area from the bustling capital with better social, economic, educational and cultural infrastructure.
Its lower salaries for investment managers than those at private investment banks are also blamed for the staff shortage.
The understaffing poses a risk to the NPS’s fund management capabilities, investment experts warned.
National Pension Service Chairman Kim Tae-hyun speaks at San Francisco office
Last month, the Korean government vowed in its national pension fund reform proposal to up the NPS’s investment return to more than 5.5% from the current 4.5%.
If the government’s NPS reform bill passes, the total assets managed by the NPS Investment Management could also jump to 5,000 trillion won in 2026 from 1,100 trillion won as of the end of July.
Without enough numbers of investment experts at the NPS Investment Management, it would be too daunting to manage large national fund assets with handsome investment returns, worried investment experts.
RELOCATION AGAIN TO SEOUL?
Some suggest returning the NPS head office to Seoul to bring enough fund managers on board.
But the NPS relocation requires an amendment in the country’s national pension law, making it hard to happen any time soon.
Others recommend hikes in pay for NPS investment experts, which should be large enough to offset the disadvantages of raising a family far from the capital city.
Opening more regional offices overseas could be another option to entice fund managers’ interest in NPS jobs and improve the quality of the fund’s national management, said Nam Jae-woo, a fund and pension research fellow at the Korea Capital Market Institute.
The NPS has 22.35 million insured people, nearly half of South Korea’s entire population with 5.86 million beneficiaries.
It boasts a cumulative return of 682 trillion won since its inception in 1988.
It logged a 9.71% investment return for the first six months of this year.
By Se-Min Huh and Jung-hwan Hwang
semin@hankyung.com
Sookyung Seo edited this article.
