NPS Moved to Jeonju, Earned More... But "Weekend KTX Is Even More Crowded" [Weekend Money]

[The Address of Money ②] How Fund and Mutual Aid Institutions Relocate to Regional Areas
50.6% of Population and 53% of GDP Concentrated in the Seoul Metropolitan Area
NPS Move to Jeonju Shows Impact of Partner Institution Relocations
Government: "Clustering and Focus Principles Reflected in Relocation Plan"

Editor's NoteInvestment banking (IB) is an industry where efficiency increases as more capital, talent, and information are clustered together. However, the costs of overconcentration in the Seoul metropolitan area are also increasing. As the government has postponed the final decision on the second round of public institution relocations to between October and November, this two-part series examines what can be gained and lost through the relocation of financial institutions to local areas, using the example of the National Pension Service’s move to Jeonju.

The Seoul metropolitan area, which covers just 11.8% of South Korea's land mass, is home to 50.6% of the total population. It also generates 53% of the nation's gross domestic product (GDP). When companies and talent gather closely, productivity rises, but there are also costs to such concentration. In 2023, the average daily commute for Korean workers was 72.6 minutes. The OECD has highlighted how the concentration in the metropolitan area is accompanied by housing shortages, high living costs, and heavy traffic congestion. In non-metropolitan regions, good jobs and young people are leaving.

To alleviate this overconcentration and regional imbalance, the government is pushing for a second round of public institution relocations to local areas.

The financial sector already experienced such a move nine years ago, when one of its largest institutions—the National Pension Service Investment Management Office, which manages over 1,800 trillion won in assets—was relocated from Seoul to Jeonju. This is a representative precedent for weighing the benefits and limitations of relocating financial institutions outside the capital.

Looking at Returns After the NPS Moved to Jeonju

The Investment Management Office relocated to Jeonju in 2017. Even at that time, there were many concerns in the financial industry that moving away from Seoul's asset management firms, securities companies, investment banks (IB), and expert talent could lead to diminished performance.

According to a report from the Jeonbuk Institute, the average annual return from 2014 to 2016, before the move, was 4.9%. The average from 2017 to 2025, after relocating to Jeonju, was 8.6%. In other words, there was no simple evidence supporting the idea that “leaving Seoul means lower returns.”

Of course, this does not mean that the move to Jeonju directly boosted returns. In 2018 and 2022, there were years of negative returns due to shocks in the global financial markets, while the strong results from 2023 to 2025 were influenced by stock market performance, exchange rates, and changes in asset allocation. The Jeonbuk Institute also noted, "Performance is influenced more by market environment, asset allocation, and risk management—internal capabilities—than location."

As of the end of May this year, the NPS's reserve assets stood at 1,848.7 trillion won. Of this, 51.9% of financial assets, or 959.5 trillion won, are entrusted to external asset managers both domestically and abroad. From the perspective of asset management companies, the NPS is a super-large client worth opening an office in Jeonju for.

Private financial firms have begun responding. KB Financial Group established a financial town in Jeonbuk Innovation City, deploying hundreds of employees, while 44 staff now work at the Jeonju headquarters of Shinhan Fund Partners. Hana and Woori Financial Groups each announced plans to increase their staff in Jeonju to over 100 employees.

Global financial companies are also increasing their presence in Jeonju. BlackRock and Allianz Global Investors opened offices there in March, joined in July by Starwood Capital, a global alternative investment manager. According to the NPS, as of July, 12 foreign asset management companies and 25 domestic and international financial institutions now have offices based in Jeonju.

The Jeonbuk Institute evaluates that "the NPS, as a major investor, is playing the role of a 'demand creator' by pulling in asset managers and financial groups." The vision is that, with the addition of the NPS, financial holding companies, global asset managers, and mutual aid associations, functions such as asset management, custody, alternative investment, and risk management could be further clustered in the region.

While the initial signs of a new financial cluster are emerging around a major institution like the NPS, there are still significant counter-arguments. The key issue is whether it is possible to build up not just the number of offices, but also the core investment workforce and decision-making functions in the region.

An investment banking (IB) industry insider commented, "It's true that multiple asset manager offices have opened in Jeonju, but in reality, almost no professionals prefer to work there. They say the number of resident staff has risen, but the most tangible result is that it's now even harder to get tickets for the weekend Seoul-Ikisan KTX trains."

Some argue that to maximize the effectiveness of relocating institutions to non-metropolitan areas, the relocation method must change. The head of one financial institution, reportedly a relocation candidate, recently proposed to the central government that instead of the government simply designating which institution goes to which area, local governments should compete to attract institutions, similar to how they attract businesses. The idea is that local governments should first offer the types of support—such as housing, special allocations, land and permits, education, and transport conditions—that make staff actually willing to relocate.

'From Splitting the Pie to Clustered Concentration'...Government's Focus On Striking a Balance

National Pension Service Headquarters

Research on the first round of public institution relocations showed that simply moving the address of an institution does not necessarily create a local industry.

According to a 2021 Korea Development Institute (KDI) report, "Employment in manufacturing and regional service industries increased in innovation cities, but there was no significant rise in knowledge-based industry employment. The biggest effects were seen when relocated institutions linked up with existing industries, as in finance and film in Busan or healthcare in Gangwon." In June, the National Assembly Futures Institute also advised, "Rather than spreading public institutions evenly, it's necessary to concentrate core functions in key non-metropolitan hubs."

After collecting diverse views, the government plans to finalize the second relocation plan around October or November. Minister of Land, Infrastructure and Transport Kim Yoon-duk has stated that the guiding principle is "clustering and focus." The plan is to co-locate institutions with similar functions, centering on innovation cities—an approach consistent with previous research findings.

Looking at the NPS example, there was no simple relationship between relocating to a local area and a decline in returns. Private financial firms have gradually followed to Jeonju. At the same time, an increase in the number of financial company offices is distinct from the actual relocation of core investment professionals and decision-making functions.

This is the challenge at the heart of the government's principle of "clustering and focus": reducing overconcentration in the Seoul metropolitan area while maintaining the competitiveness of the financial sector. The key issue is how well the government can fine-tune the values of concentration and balance in the actual relocation plan.

This content was produced with the assistance of AI translation services.