[Exclusive] "Why Are We Paid 10 Million Won Less at the Same Workplace?"... 101 Employees Left in 10 Years [NPS Staffing Shortage]②

Average Compensation for Fund Managers Remains Below Global Peers
101 Alternative Investment Staff Have Resigned Since 2017
"Competitive Rewards Needed to Retain Top Talent"

After the National Pension Service (NPS) Fund Management Headquarters relocated to Jeonju, it was found that the largest number of fund managers resigning came from the alternative investment sector. These managers also receive the lowest base salary among all positions. In addition, criticism has been raised that the total compensation at the Fund Management Headquarters is lower compared to overseas pension funds.

According to data received by the office of Han Jia, a member of the National Assembly’s Health and Welfare Committee from the People Power Party, from the NPS Fund Management Headquarters, a total of 274 employees have resigned from the Fund Management Headquarters since its 2017 relocation to Jeonju through August of this year. Of these, the alternative investment segment—including private equity, real estate, and infrastructure—saw the highest number of resignations at 101. In 2017 and 2018, before the Alternative Investment Division and Overseas Alternative Division were split into the Private Equity, Real Estate, and Infrastructure Divisions, 11 and 15 people resigned, respectively. Since 2019, the infrastructure investment division has recorded the most resignations, with 29. The real estate investment division saw 24, and the private equity and venture investment division saw 22. In other investment areas such as equity and fixed income (including overseas equities and bonds), 83 people resigned. Following this, 49 people resigned from the strategy division, 27 from risk management, and 12 from support functions.

This trend has been attributed to lower salaries relative to the private sector. In compliance with the Ministry of Strategy and Finance’s public institution total payroll system, the NPS must follow the wage increase rate set by the ministry when raising base salaries. As a result, fund managers face wage limitations and are unable to match private sector salary levels. Furthermore, even within the headquarters, alternative investment managers receive lower base salaries compared to other departments. Among the seven units involved in fund management (domestic equity, domestic fixed income, overseas equity, overseas fixed income, private equity/venture, real estate, and infrastructure), the average base salary is lowest for the alternative investments division. Private equity and venture staff in particular receive an average base salary of 84.65 million won, placing them at the bottom among all departments. Real estate follows with 85.49 million won, and infrastructure at 87.11 million won, ranking second and fourth from the bottom, respectively. Specifically, the gap between alternative and non-alternative sectors began in 2021, when alternative investment positions started to receive less. Up to 2020, the average base salaries for the two sectors were very similar, but in 2021 a gap of 5.84 million won emerged, with a difference of nearly 10 million won continuing annually since 2022.

The issue is not confined to alternative investments. The overall compensation for all fund managers at the headquarters also remains lower than that at overseas pension funds. Although a revised performance-based pay structure last year significantly increased total annual salaries (base pay plus bonuses), these remain below international standards. In 2023, the average total annual salary per fund manager at the headquarters (excluding deferred payments) was 194 million won, an increase of over 80 million won from 115.44 million won in 2024. However, this figure does not even reach half of the average annual salary for fund managers at the California Public Employees' Retirement System (CalPERS) in the United States, which stands at 415.87 million won. The per-capita payroll for the Canada Pension Plan Investment Board (CPPIB) and the Netherlands’ ABP manager APG amounted to 565.38 million won and 255.02 million won, respectively, both substantially higher than that of the NPS.

Because of these conditions, resignations remain frequent and full staffing is not achieved, even with an increase in the number of funded positions at the headquarters. Following a Ministry of Health and Welfare improvement plan, the authorized staff complement was increased from 365 in 2023 to 415 in 2024, then to 419 last year, and 441 this year. However, as of August this year, the staff fill rate is only 89%, which is not much different from the rate in the 90% range recorded from 2017 through last year. In particular, there is a shortage of young professionals. This year, the fill rate for the two lowest positions—junior and associate managers—stood at just 78.5%. By contrast, the most senior staff position—senior manager—has a 100% fill rate, while the next lower positions—lead and principal—are at 98% and 97%, respectively. In September, the Fund Management Headquarters posted a hiring announcement for three principal managers and 27 associate managers. Even if all 27 associate manager positions are filled, the fill rate for this group would only reach 91%, still lower than that of other ranks.

There are calls to further increase salaries and invest in building up the talent pool. In addition, it is argued that expanding the in-house management workforce would increase the share of direct investments and reduce external mandates, leading to more efficient investment. The CPPIB is a representative example: alternative investments account for 51% of its portfolio, of which 78% are managed directly in-house. By comparison, as of June this year, 98.7% of alternative investment assets at the NPS were managed by external managers. CPPIB employs 585 alternative investment managers—more than the total headcount at the Fund Management Headquarters, and nearly six times as many as the NPS’s alternative investment team. With this capacity, CPPIB is able to conduct extensive direct investments. Direct investment reduces management fees paid to external partners. In the case of outsourced management, up to 1.5% of the committed amount must be paid annually to general partner (GP) firms. Given the NPS’s alternative investment outsourcing of 257.4 trillion won as of June, the pension fund could be paying as much as 3.86 trillion won in fees each year. This amount would allow the NPS to pay each of its 391 current fund managers 9.87 billion won per year.

Assemblywoman Han commented, “The competitiveness of the Fund Management Headquarters in managing the public's retirement assets comes down to recruiting and retaining excellent professionals. Appropriate compensation commensurate with expertise and results must be provided, and the personnel and rewards system should be upgraded so that outstanding talent can serve in the long-term, thus ensuring the sustainability of the fund’s management capabilities.”

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