NPS extends term for CIO Ahn Hyo-joon; likely to drive overseas investment

Ahn Hyo-joon, the incumbent chief investment officer at the National Pension Service will see his term extended by one year, the NPS and the Ministry of Health and Welfare announced on Oct. 6. Ahn will maintain his role as the CIO of the world’s third-largest pension fund until October 2021.

Under the National Pension Act and internal guidelines, a CIO can serve a two-year term and is then eligible to serve another year based on his or her performance. The government’s decision to extend Ahn’s term is backed by his overall performance and drive to fortify overseas operations.

AHN’S PERFORMANCE WELL RECEIVED AMID GLOBAL PANDEMIC

Under Ahn’s leadership, the NPS posted a record-high return of 11.34% in 2019, the highest since its inception in 1999. The pension fund’s performance this year is also relatively solid, posting 3.56% in returns as of late July amid unfavorable economic circumstances spurred by the global pandemic.

In addition to Ahn’s performance, the government determined that replacing the CIO during looming economic uncertainty alongside the recent appointment of a new chief executive officer could be destabilizing for the pension fund's operations -- especially considering that Ahn had led the NPS while the CEO seat remained vacant for eight months before Kim Yong-jin was appointed as the new CEO in September.

“It would’ve been too burdensome for both the government and the market to usher in two new faces to lead the NPS when economic circumstances at home and abroad are not at their best,” said a source familiar with the NPS.

“Ahn comes from the NPS and has an established relationship with the team. It makes sense for him to serve a consecutive year as he is already familiar with the organization and knows how to manage it,” the source added.

OVERSEAS AND ALTERNATIVE INVESTMENTS TO GAIN STEAM

Ahn’s extended term will accelerate the pension fund’s drive to increase overseas and alternative investments. The NPS is aiming to beef up the proportion of alternatives to 15% and overseas investments to 55% by 2025.

Since Ahn took on the CIO role, he has committed to restoring order within the pension fund and boosting overseas and alternative asset investments. In 2019, alternative asset investment divisions that had been divided into domestic and overseas units were reclassified into three asset classes – private equity, real estate, and infrastructure.

Ahn’s other achievements include instilling a speedier decision-making process for investments that are below $50 million (about 60 billion won) or joint investments. He is also set on establishing a working relationship with global financial institutions to secure a steady flow in the overseas investment pipeline. The $2.3 billion property fund jointly launched with NPS and Germany’s Allianz SE is an example of such measures.

Ahn worked as the chief executive officer of BNK Financial Group just before becoming the chief investment officer at NPS. This marked his return to the pension fund as he had previously worked at NPS between 2011 and 2013 as the head of the domestic equity division and the global public market division. In 2013, Ahn was the head of Kyobo AXA Investment Managers, before becoming the CEO of BNK Financial Group.

The NPS is the third-largest pension fund in the world alongside Japan’s Government Pension Investment Fund and the Government Pension Fund of Norway. The pension service posted a record-high return of 11.31% as of December 2019.

Write to Jung-hwan Hwang at jung@hankyung.com