The competition rate for hiring fund managers at the National Pension Service (NPS), which manages a fund worth 1,200 trillion won, remains at its lowest level. There are concerns that difficulties in attracting talent, due to the relocation to Jeonju and compensation issues, could further intensify the vicious cycle of declining operational capabilities.

According to the Public Institution Management Information System (ALIO) on July 15, the competition rate for the first-round NPS fund manager recruitment this year was recorded at 3.57 to 1. The NPS plans to hire 28 people across 14 fields, and 100 people applied. This is similar to last year's record low average competition rate of 3.45 to 1 across six rounds. The competition rate for fund manager recruitment has been declining, with 7.22 to 1 in 2020, 4.38 to 1 in 2021, 3.83 to 1 in 2022, and 4.06 to 1 in 2023.

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By recruitment field, there were no applicants for the position of chief fund manager in charge of financial settlement, which has one opening. For the positions of dedicated alternative risk management fund manager and dedicated financial settlement fund manager, the number of applicants matched the number of openings?two and one, respectively?but since no one passed the first screening, these positions were effectively unfilled. The alternative investment fields (private equity venture, real estate, infrastructure) had a competition rate of 5.75 to 1 (46 applicants for 8 positions), which was above average.

Industry insiders point to geographic conditions as the primary reason for the declining competition rate. The NPS headquarters is located in Jeonbuk Innovation City, which is far from downtown Jeonju and about a 30-minute drive from KTX Iksan Station, making it relatively inaccessible. Furthermore, the temporary housing provided to help employees settle in Jeonju was discontinued early this year. Temporary housing is usually provided for four years after an institution relocates to a new region, with the possibility of a two-year extension upon government approval. For the NPS Fund Management Headquarters, temporary housing was extended twice, operating for a total of eight years from early 2017 to early this year. Although separate accommodations are provided for new fund managers, even these are limited to a three-year term. The added burden of living conditions, such as children's education, is also discouraging potential applicants.

The NPS Fund Management Headquarters was once considered a "dream job," with the competition rate soaring to 32 to 1 in 2014. However, after the headquarters relocated to Jeonju in 2015, the rate dropped sharply to 9 to 1 that year. Since falling to 5.3 to 1 in 2018, the competition rate has remained in the single digits.

Internal issues, such as lower compensation compared to the private financial sector, are also a major factor in the decline in applicants. The NPS Fund Management Headquarters' performance bonuses have been decreasing every year. The ratio of performance bonuses to base salary was 73.7% in 2019, 86.7% in 2020, 67.7% in 2021, 51.1% in 2022, 39.9% in 2023, and 36.5% in 2024. An investment industry insider said, "Performance bonuses are steadily declining, and rumors about promotion bottlenecks and dissatisfaction with personnel management have led to a poor team atmosphere. As a result, it's inevitable that fewer people are applying."

Office workers are disappointed with the decreasing performance bonuses. DALL·E 3｜Graphic by Inwook Kim

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As the inflow of talent dries up, concerns are growing about a decline in operational quality. Last year, the fund management return rate was 15.32% (time-weighted return), the highest ever, but it was still 0.23 percentage points below the benchmark return rate. In 2023, the return rate was only 0.04 percentage points above the benchmark. The same investment industry insider commented, "The top performers are being headhunted and leaving, and only those of mediocre ability remain, which seems to be resulting in poor performance."