NPS to bump up senior investment staff’s pay, create deputy CIO posts

  • 2017-03-02

South Korea’s National Pension Service (NPS) will almost double the basic salary of its investment division heads by stages to 324 million won ($286,726) to narrow the pay gap with domestic asset management companies, in its latest measure to curb the outflow of core talents from the world’s No. 3 pension scheme.

The state fund will also reorganize its alternative investment divisions, currently divided into domestic and global assets, into three asset classes – real estate, infrastructure and private equity – to improve expertise and capabilities of alternative investments which are predicted to soar to 100 trillion won ($89 billion) by 2021, the Ministry of Health and Welfare said in a statement on Feb. 28.

The “measures to stem human capital outflows after the relocation to a provincial city” comes after 11 asset management employees of the NPS have quit, or offered to resign since the beginning of the year. In 2016, 30 fund management staff, three times as many as a year earlier, had left the $480 billion fund.

“Remuneration of our investment managers are broadly in line with the market average,” the welfare ministry said in the statement. “In consultation with the finance ministry, we will secure medium- to long-term budget to raise their salaries by stages to the level of top 25% in the market.”

NPS will bump up the basic pays for investment division heads, team leaders and other employees at the Investment Management department to the level of the top 25% of asset management firms in the country. The planned salary increase is estimated to cost an additional 4.3 billion won, according to the ministry.

Senior investment managers of the NPS, under the division heads or executives, receive 100 million to 137 million won in base salary a year, plus performance bonus of 15 to 20% of basic pays. With the prospective pay hike, the base salary for team leaders is expected to climb by 21% to 166 million won a year.

Of gross salary, the share of performance bonus will increase. For long-serving employees for more than seven years, their basic pay will also be raised to encourage employees to serve for a long time.

The quit rate in the NPS was the highest among senior managers: five out of seven investment division heads have left the NPS since last year. Recently, global alternative investment head Sang-Hyun Yoo and global public market head Kyung-Jik Lee have offered to step down.

Among 26 team leaders, seven resigned: global infrastructure investment team leader and global fixed-income team leader have moved to private asset management firms. Among junior staff, 29 out of 226 employees have quit.

Along with the pay raise plan, the pension scheme will create two deputy chief investment officer roles in its first reorganization of the fund management department in 10 years. Deputy CIOs will head the public sector which includes stocks and fixed-income assets, with the alternative investment sector head  leading private equity, real estate and infrastructure investments.

The creation of two deputy CIO posts, underneath CIO Myoun-Wook Kang, are also intended to give promotion opportunities to division heads, boosting their morale, the statement added.

The announcement came after the Korean Investors reported the reorganization plan last November.

“As we need to diversify investments to increase the rate of return, we have to strengthen our alternative investment capabilities. This reorganization is part of our effort to do so,” said an NPS source.

By Chang Jae Yoo

yoocool@hankyung.com

<Edited by Yeonhee Kim>