NPS narrows search for new CIO to two major candidates

South Korea’s National Pension Service (NPS), the world’s third-largest pension fund managing 917.2 trillion won ($692 billion) in assets as of end-August, closed the window for new chief investment officer applications on Nov. 11, with the two major candidates coming from sovereign wealth fund Korea Investment Corporation (KIC) and retirement fund Government Employees Pension Service (GEPS).

Set to be chosen as early as January 2023, the recruitment of the new CIO is expected to be a run-off of the two external candidates: former KIC CIO Park Dae-yang and former GEPS CIO Seo Won-joo, according to investment banking sources on Nov. 15.

NPS’ acting CIO Park Seong-tae, managing director of the fund's Investment Strategy and Responsible Investment & Governance, didn’t apply for the position.

Other professionals regarded as potential candidates, including Kang Shin-woo who served as KIC’s CIO between 2016 and 2019, Jang Dong-hun, former CIO of Public Officials’ Benefit Association (POBA) and Seo Jong-kun, of state-run Korea Growth Investment Corp., didn’t submit applications.

IB sources said that the challenges that the new CIO faces, such as the negative returns on investment during the first half of the year and the resignation of investment managers, have led to the low competition rate for the position.

NPS’s fund management arm achieved 10.57% annualized returns on average between 2019 and 2021 under former CIO Ahn Hyo-joon's leadership. But it had negative 4.74% in returns as of end-August due to the Fed's quantitative tightening and global supply disruptions. Worse, a total of 23 investment managers left the pension fund from January to end-October of this year.

DOWN TO TWO BIG CANDIDATES

Born in 1961, Park started his financial career as an investment manager at Samsung Life Insurance Co. in 1987. He also served as investment strategy head at MG Korean Federation of Community Credit Cooperatives and CIO at Allianz Life Insurance and Teachers’ Pension.

During his three-year term as KIC’s CIO from 2019, the sovereign wealth fund achieved returns of 15.21%, 13.52% and 8.94% in 2019, 2020 and 2021, respectively. Park earned a bachelor’s degree from Korea University and an MBA from The University of Iowa.

Seo, born in 1966, also worked for Samsung Life Insurance and Samsung Asset Management Co. from 1988 to 2014. He served as CIO at the now-defunct PCA Life Insurance, which was merged with Mirae Asset Life Insurance Co. between 2014 and 2018 and has led the government official’s pension for three years from 2019.

During his term, GEPS posted returns of 9.56%, 11.41% and 9.7% in 2019, 2020 and 2021, respectively. Seo earned a bachelor’s degree and an MBA from Yonsei University.

NPS will screen for the new CIO position by analyzing the candidates' documents and through interviews with them. Its selection committee under the fund management’s board of directors will recommend the final candidate to Korea’s health minister, who must approve the recruitment. The CIO’s term is for two years, and can be extended by one year.

Write to Jun-Ho Cha at chacha@hankyung.com
Jihyun Kim edited this article.