Transfer to hinterland triggers mind drain at Korea’s mega pension fund


SEOUL: Earlier this 12 months, Lee left her fund administration job at South Korea’s nationwide pension fund, the world’s third-largest, fed up with lengthy commutes between her dwelling in Seoul and her workplace in Jeonju, 200 kilometers away.

For 4 years, Lee lived in a studio residence in Jeonju, a metropolis of 658,000, on weekdays, and traveled again to Seoul for the weekend. She feared her household would break up if she did not make the arduous determination to stop.

Lee is one in every of some 140 cash managers who has left the 930.5 trillion received ($788 billion) Nationwide Pension Service since 2016, shortly earlier than it moved to Jeonju, a sleepy provincial capital, as a part of the federal government’s relocation of main companies away from the capital Seoul.

That’s virtually half the 320 at present working on the fund’s funding arm, an alarming mind drain for the principle public retirement plan of Asia’s fourth-largest financial system and a significant investor in Korean blue-chips akin to Samsung Electronics and Hyundai Motor Co..

“Staying in Jeonju for the weekdays, I felt I used to be lacking out on a lot of my life, I could not stand it anymore and determined to move as much as Seoul,” mentioned Lee, who now works for an asset supervisor based mostly in Seoul’s monetary district and agreed to be recognized solely by her surname.

With belongings valued at practically half the nation’s gross home product, the NPS manages pensions for personal sector staff and self-employed South Koreans.

A large wave of retirements due in coming years on this planet’s quickest ageing society has raised the stakes for administration on the fund.

Over the previous 5 years, nevertheless, the NPS has solely crammed 57% of jobs it opened.

An NPS official mentioned that partly displays the better variety of openings because the fund grows investments however acknowledged the problems across the relocation.

“Though it has stabilised lots in comparison with earlier than our relocation to Jeonju, the problem relating to manpower appears to have re-emerged as a result of we just lately elevated job openings in a big scale which seemingly pushed up the relative emptiness fee,” the official advised Reuters in response to queries.

“As our abroad funding expands, so are alternatives to work overseas, and efforts are being made to inspire expertise to remain in service by enhancing working situations, and we even have expertise improvement programmes.”

To plug employees shortages, it eliminated the obligatory one-year work expertise requirement for the primary time from its job postings in September and commenced providing alternatives to work overseas, even to home fairness fund managers.

The NPS’s annualised funding return for 2020 was 9.7%, beneath 25.15% for Japan’s GPIF in fiscal 2020 and 20.4% at Canada Pension Plan Funding Board.

That partly displays the extra conservative nature of its investments, fund managers say, which additionally means it’s much less uncovered throughout downturns.

Nevertheless, the NPS now plans to increase its abroad funding allocations to 50% by 2024 from 34% in 2019.

It has 30 employees throughout branches in New York, London and Singapore as of 2020, far fewer than the 351 employees at Canada’s CPPIB and 252 at Norway’s NBIM of their numerous abroad places of work, 2020 knowledge from the NPS reveals.

Extra formidable returns would demand a deeper pool of funding expertise, which has grow to be tougher to draw and retain because the relocation in 2017.

“Once I was a supervisor there about eight to 10 candidates used to compete for one fund supervisor place, after we screened out inexperienced ones, and that is when the fund’s pay degree was even decrease,” mentioned Hong Chun-uk, who resigned from a senior fund supervisor place on the NPS in 2015.

He left the fund after it introduced its relocation and has since grow to be an economist at Seoul-based brokerage.


The NPS is one in every of about 150 state companies and public companies which have moved out of Seoul since 2005, with one other batch of about 100 establishments, together with a part of the Nationwide Meeting, additionally deliberate for relocation.

The most important shift was a part of a authorities plan to decentralise financial and political energy away from Seoul, ease congestion within the capital and develop regional cities.

The wrestle to fill roles on the fund has fueled debate over the deserves of relocating essential public establishments.

Two fund managers who left the NPS mentioned the mind drain concern hasn’t adversely affected the fund’s efficiency but however pension consultants say it is going to.

“In Korea, there’s robust choice to reside within the capital Seoul, amongst households, for faculties and way of life,” Yun Suk-myung, head of the Korean Pension Affiliation mentioned. “Clearly the political push ignored that and having inexperienced, incompetent fundies will finally harm its funding returns.”

For a lot of fund managers used to a sure commonplace of city residing, Jeonju has its limitations.

“There may be one fashionable restaurant I went to typically and I used to satisfy my boss and people from different groups all there,” Lee mentioned. “Everybody on the NPS form of expects colleagues to be across the city.”- Reuters

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