NPS should revamp operating personnel, strategy
The National Pension Service said it posted an 8 percent investment loss for the first half of this year. The six-month loss totaled 76.7 trillion won ($57 billion), a sum sufficient to give pensions to all recipients for about two and a half years. The state pension fund attributed its poor investment returns to plunging stock markets at home and abroad due to global monetary tightening and Russia's war in Ukraine.
Citing how some foreign pension funds' investments lost more than 10 percent in the same period, NPS officials said that their own performance was not particularly bad. However, chances are slim that the state pension fund's operating returns will improve, considering the grim outlook for global and local capital markets amid the continuous interest rate hikes in the U.S. and concerns about a business slump in major economies.
Actually, a bigger problem lies within the NPS, as the pension service is rocking on its foundations, which include personnel management and investment strategy. Now is the time for the government to discover defects in its asset management and operational strategy. Most pressing are the prolonged vacancy of the NPS chairmanship and the departure of workers from the fund management headquarters.
Since the NPS moved its main office in 2017 to Jeonju, some 200 kilometers south of Seoul, about 130 fund managers have left the agency, leaving it 20 percent short of its full capacity. To avoid further workforce attrition and to attract more workers, the NPS should consider moving at least its fund management headquarters back to Seoul.
Equally important is reforming the operating organization to strengthen expertise and independence. In May, the NPS revised its operational strategy by lowering its exposure to domestic stocks and bonds while increasing its investment in overseas stocks. However, the global financial markets have changed drastically, forcing it to "re-revise" the existing strategy. Accordingly, the NPS, one of the three largest pension funds worldwide with nearly 920 trillion won in assets under its management, ought to overhaul the agency's organizational structure and operational strategy to improve its investment returns.
The National Pension Service said it posted an 8 percent investment loss for the first half of this year. The six-month loss totaled 76.7 trillion won ($57 billion), a sum sufficient to give pensions to all recipients for about two and a half years. The state pension fund attributed its poor investment returns to plunging stock markets at home and abroad due to global monetary tightening and Russia's war in Ukraine.
Citing how some foreign pension funds' investments lost more than 10 percent in the same period, NPS officials said that their own performance was not particularly bad. However, chances are slim that the state pension fund's operating returns will improve, considering the grim outlook for global and local capital markets amid the continuous interest rate hikes in the U.S. and concerns about a business slump in major economies.
Actually, a bigger problem lies within the NPS, as the pension service is rocking on its foundations, which include personnel management and investment strategy. Now is the time for the government to discover defects in its asset management and operational strategy. Most pressing are the prolonged vacancy of the NPS chairmanship and the departure of workers from the fund management headquarters.
Since the NPS moved its main office in 2017 to Jeonju, some 200 kilometers south of Seoul, about 130 fund managers have left the agency, leaving it 20 percent short of its full capacity. To avoid further workforce attrition and to attract more workers, the NPS should consider moving at least its fund management headquarters back to Seoul.
Equally important is reforming the operating organization to strengthen expertise and independence. In May, the NPS revised its operational strategy by lowering its exposure to domestic stocks and bonds while increasing its investment in overseas stocks. However, the global financial markets have changed drastically, forcing it to "re-revise" the existing strategy. Accordingly, the NPS, one of the three largest pension funds worldwide with nearly 920 trillion won in assets under its management, ought to overhaul the agency's organizational structure and operational strategy to improve its investment returns.
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