KIC, NPS agree not to hire each other’s ex-fund managers: report

Jan 26, 2017 (Gmt+09:00)

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Korea Investment Corporation (KIC), a sovereign wealth fund, has agreed with the National Pension Service (NPS) not to employ each other’s former investment officials, as the pension fund is struggling with the continual outflows of fund managers ahead of its relocation to a small city next month, according to a newspaper report.

Since installed as the sovereign fund’s CEO last year, Sung-soo Eun had called on its human resources department to set a new guideline on experienced hires so that it can avoid hiring ex-NPS’ Investment Management employees, the Seoul Economic Daily said on Jan. 25, citing financial industry sources.

KIC is worried that hiring even a single ex-NPS investment official could trigger an exodus of the NPS’ experienced fund managers.

“We, as a sovereign wealth fund, need to think about seriously how to stop the outflows of fund managers from the (NPS) Investment Management office which takes care of our retirement money,” a KIC source told the newspaper. “NPS and KIC … are the organization with the same sense of mission.”

The KIC is now looking for experienced fixed-income managers to fill the vacancies created after its former employees moved to private companies.

The NPS’s Investment Management department also has been hiring replacements of those who had quit, with the fund size growing rapidly.

Previously, KIC’s job postings for experienced investment managers had hardly attracted the attention of the NPS’ investment managers, given that both state funds are based in Seoul, the capital of the country.

But now the NPS is moving in February to a provincial city, three-hour drive from Seoul, and became the target of the special prosecutor’s investigations as part of the country’s corruption scandal, about 10 employees of the Investment Management unit reportedly have quit since the start of this year, following the departures of 30 fund managers last year.

Meanwhile, South Korea’s health and welfare minister Chinyoub Chung said in the NPS’ investment management committee meeting on Jan. 25 that his ministry will come up with measures to improve independence and transparency of the NPS’ investment management, and introduce training programs to prevent further heavy outflows of employees.

According to the ministry, NPS posted a 4%-level investment return in 2016, little changed from the previous year’s 4.57%.