[Policy Insight] Private Asset Managers Running 'Half' of the National Pension Fund — Priority Given to Regional Firms? "Concerns Over Investment Returns"

When selecting delegated asset managers, the National Pension Fund Management Headquarters is required to consider the following criteria: (1) management stability, (2) investment track record, (3) investment strategy and process, (4) investment organization and personnel, and (5) risk management framework. In particular, the evaluation is designed to focus closely on the degree to which managers have generated excess returns relative to the benchmark (the market average return) and whether performance has been maintained with consistency.

Critics have raised the concern that if regional location is given precedence in the selection process, asset managers that fail to meet these established criteria may nonetheless be chosen. Yoon Seok-myung, Honorary Research Fellow at the Korea Institute for Health and Social Affairs (KIHASA), stated: "We should be selecting the world's most capable fund managers; allocating mandates simply because a firm is located in a particular region is inappropriate. The Fund Management Headquarters itself has suffered from a shortage of investment talent since relocating to Jeonju, and this approach could worsen the problem further."

There are also concerns that the policy could give rise to a proliferation of nominally regional headquarters — firms that merely register a legal address in the region without substantive operations. Were this to occur, the original objective of revitalizing the regional economy would likewise become difficult to achieve. An industry official noted: "Many domestic and foreign asset management firms currently maintain offices in Jeonju, but in numerous cases these are little more than nominal offices with virtually no resident staff."

Pension experts also express concern that the independence of the National Pension could be compromised. One expert, who requested anonymity, remarked: "If asset managers located in a particular region are compelled to receive delegated mandates for National Pension Fund management, the result is effectively external interference in pension investment operations. Only through transparent and independent management of the public's retirement assets can investment returns be properly safeguarded."

https://n.news.naver.com/article/366/0001133808?sid=101