Pension

Scandal-hit pension fund loses managers ahead of relocation

Health and Welfare Minister Chung Chin-youb speaks during a meeting of the NPS fund management committee at a hotel in Seoul, Wednesday. (Yonhap)

South Korea’s pension behemoth is suffering an exodus of fund managers ahead of its planned relocation from Seoul to Jeonju, North Jeolla Province, in late February, according to news reports.

The managers’ leaving the National Pension Service coincides with the ongoing political scandal that led the special prosecutor to indict NPS CEO Moon Hyung-pyo on Jan. 16 on charges of abusing power and giving false testimony. He acknowledged having pressured the world’s third-largest pension fund to give the go-ahead for the merger between two Samsung affiliates in 2015 when he was head of the Ministry of Health and Welfare, which oversees the NPS.

The number of fund managers leaving the NPS surged to 30 last year from 10 in 2015, local news reports said. This year, eight managers have already tendered their resignations. Moreover, about 50 fund managers’ contracts with the NPS expire within six months after the planned relocation about 200 kilometers south of Seoul.

Those leaving the NPS are often scouted by various financial firms, such as asset management companies, securities and investment banks located in Seoul.

Some 220 fund managers, currently working at the NPS’ fund management office at the heart of the capital on Garosugil in Sinsa-dong, Seoul, are required to join the NPS’ head office in Jeonju between Feb. 25 and 28.

“Some fund managers at the NPS left there last year because they didn’t want to move to Jeonju. Most of the managers at the global alternative division left,” said an industry source, who requested not to be named.

Losing managers in the global alternative division is a minus for the NPS, which has been boosting asset allocation in alternative investment in recent years for higher returns. The NPS fund’s annual return marked 4.6 percent in 2015, while the annual return in the alternative sector reached 12.3 percent that year.

The source, who works at a Seoul office, complained about having to schedule a whole day to visit the NPS in Jeonju.

The NPS, which manages about 545 trillion won ($464 billion) collected from 21 million Korean subscribers, is a significant client for leading asset managers around the world hunting for attractive real estate, infrastructure and hedge funds for alternative investments amid low interest rates.

Overseas asset managers, who typically schedule a day in Seoul between their business trips to Beijing and Tokyo, would have to extend their stays in Korea to visit NPS in Jeonju.

The fund management committee, which deals with major decisions for the NPS, recently had its first meeting this year and criticized the NPS for not having a “smart plan” to attract outside managers and resolve the issue of inefficient networking and decreased business opportunities, according to Seoul Economic Daily.

At the meeting, the NPS’ acting CEO Lee Won-hee said she would come up with a comprehensive measure within February to prevent managers from leaving and restore people’s trust in the NPS, the daily said.

The Korea Herald

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