The National Pension Service (NPS) logo can be seen at its branch in Seoul, South Korea on November 4, 2016. REUTERS / Kim Hong-Ji

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SEOUL, Nov.22 (Reuters) – Earlier this year, Lee quit his job as a fund manager at South Korea’s National Pension Fund, the third largest in the world, fed up with long journeys between his home in Seoul and his office in Jeonju, 200 kilometers away. .

For four years, Lee lived in a studio in Jeonju, a city of 658,000 people, on weekdays, and returned to Seoul for the weekend. She feared her family would break up if she didn’t make the difficult decision to quit.

Lee is one of some 140 fund managers who have left the 930.5 trillion won ($ 788 billion) National Pension Service since 2016, shortly before moving to Jeonju, a sleepy provincial capital, in the framework of the relocation by the government of the main agencies away from the capital. Seoul.

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That’s almost half of the 320 currently working in the fund’s investment arm, an alarming brain drain for Asia’s fourth-largest public pension scheme and a major investor in Korean blue chips such as Samsung Electronics (005930.KS) and Hyundai. Motor Co. (035420.KS).

“By staying in Jeonju on weekdays, I felt that I was missing a lot of my life, I couldn’t take it anymore and decided to move to Seoul,” said Lee, who now works for a Seoul-based asset manager. financial district and agreed to be identified only by her last name.

With assets valued at nearly half of the country’s gross domestic product, the NPS manages pensions for South Korean private sector workers and self-employed workers.

A massive wave of retirements expected in the coming years in the world’s fastest-aging company raised the stakes for the fund’s management.

Over the past five years, however, the NPS has only filled 57% of the jobs it has opened.

An NPS official said this partly reflected the greater number of openings as the fund increased its investments, but acknowledged the problems with the relocation.

“Although it has stabilized a lot compared to before our move to Jeonju, the manpower problem seems to have reappeared as we recently increased the large-scale job vacancies, which apparently increased the relative vacancy rate, “the official told Reuters in response to queries.

“As our investments abroad grow, the opportunities to work abroad also increase and efforts are made to motivate talent to stay in service by improving working conditions, and we also talent development programs. “

To address staff shortages, it first removed the mandatory one-year work experience requirement from its job postings in September and began offering opportunities to work abroad, even to national equity fund managers.

The annualized return on investments of the NPS for 2020 was 9.7%, less than 25.15% for the GPIF of Japan in fiscal year 2020 and 20.4% for the Investment Board of the Regime. pensions of Canada.

This in part reflects the more conservative nature of its investments, according to fund managers, which also means it is less exposed during downturns.

However, the NPS now plans to expand its overseas investment allocations to 50% by 2024, up from 34% in 2019.

It has 30 employees in branches in New York, London and Singapore in 2020, far fewer than 351 CPPIB employees in Canada and 252 NBIM employees in Norway in their various overseas offices, according to 2020 data. of the NPS.

More ambitious returns would require a larger pool of investment talent, which has become more difficult to attract and retain since the relocation in 2017.

“When I was a manager there, about eight to ten candidates were vying for a fund manager position, after we eliminated the inexperienced, and that’s when the fund’s pay level was still lower, “said Hong Chun-uk, who resigned from a senior fund manager position at NPS in 2015.

He left the fund after news of his move was announced and has since become an economist at a Seoul-based brokerage firm.

BIG MONEY, SMALL TOWN

The NPS is one of some 150 state agencies and state-owned enterprises that have left Seoul since 2005, with another batch of around 100 institutions, including part of the National Assembly, also slated for relocation.

The major change was part of a government plan to decentralize economic and political power away from Seoul, reduce congestion in the capital, and develop regional cities.

The struggle to fill roles within the fund has fueled debate over the merits of relocating critical public institutions.

Two fund managers who left the NPS said the brain drain issue had yet to affect the fund’s performance, but pension experts say it will.

“In Korea, there is a strong preference for living in the capital Seoul, among families, for schools and the way of life,” said Yun Suk-myung, head of the Korea Pensions Association. “Obviously, the political push has ignored this and having inexperienced and incompetent funds will end up hurting returns on investment.”

For many fund managers accustomed to a certain standard of urban living, Jeonju has its limits.

“There is a popular restaurant that I went to often and I used to meet my boss and people from other teams there,” Lee said. “Everyone at NPS expects their colleagues to be in town.”

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Reporting by Cynthia Kim; Editing by Sam Holmes

Our Standards: Thomson Reuters Trust Principles.