The speed of decline in the number of National Pension subscribers is increasing due to the effects of low birth rates and an aging population. To defend against fund depletion, maximizing revenue from overseas alternative investments is essential. However, it has been found that among the four overseas offices, only three local experts have been hired in total, with two in the United States and one in the United Kingdom and Singapore. Although the National Pension is selecting personnel for overseas office dispatch, it has been pointed out that in consideration of the specialization of alternative investments, where 'stagnant resources' are advantageous for deal acquisition, there needs to be a strategy to strengthen local hiring.
◇ There are only 2 people in New York and 1 in Singapore for local hiring
According to the financial investment industry on the 15th, the current number of locally hired personnel at the National Pension Fund Management Headquarters from overseas offices consists of 2 in the New York office and 1 in the Singapore office, totaling 3. Until the end of the third quarter last year, the local hiring personnel in the New York office was 3, but after one person left at the end of the year, the total number of local hires decreased from 4 to 3.
The London office in the United Kingdom and the San Francisco office in the United States have no local hiring personnel. Among them, San Francisco is a newly established office that launched in September last year. In contrast, the London office opened 13 years ago in 2012. The London office has not hired any local staff since 2020 and has eliminated its workforce entirely.
The National Pension's overseas offices serve as a base for expanding overseas investment plans to maximize fund management revenue. They focus specifically on managing institutional sectors such as real estate, infrastructure, and private equity. As of the end of November last year, the National Pension fund reserves amounted to 1,185 trillion 521.1 billion won. Of this, 190 trillion 660 billion won was invested in alternative investments, making it the third largest after overseas stocks (420 trillion 492 billion won) and domestic bonds (346 trillion 840 billion won).
◇ "Localization of investment is essential for alternative investments"
The problem is that it is virtually impossible to recruit local alternative investment experts under the treatment regulations of public institutions. The hiring situation of just 3 personnel across the four overseas offices starkly reveals the difficult reality. Faced with difficulties in local hiring, the National Pension has been issuing domestic recruitment announcements since last year to select personnel for overseas office dispatch. However, it has been pointed out that recruiting domestically and dispatching personnel is vastly different from hiring experts who have been active locally.
Hong Chun-wook, the representative of Prism Investment Consulting and a former National Pension fund manager, noted that "the fields of alternative investments like real estate and private equity are case-by-case areas where the capabilities of individuals who have built long-term experience and networks greatly influence the success of deals" and suggested that for the National Pension to hire such experts locally, the fund management headquarters should be designated as an exception under the Public Institutions Operating Act, transforming it into another public institution like Korea Investment Corporation (KIC) or KBS, EBS.
Researchers have pointed out for a long time that the issue of securing talent for the National Pension's alternative investments must be resolved. Nam Jae-woo, a researcher at the Capital Market Institute, attended the 'Measures to Improve National Pension Fund Revenue' seminar held by the National Pension Research Institute at the National Assembly in Yeouido, Seoul, in April 2023, stating, "To improve revenue, it is essential for overseas alternative investments, which are bound to expand, to engage in local network participation for the localization of investments" and added, "It is realistically difficult to expand local hiring under uniform personnel and budget controls."
Nam highlighted the need to disperse the organization of the fund management headquarters based on investment characteristics, such as to Seoul or Incheon Airport, while significantly strengthening overseas local investment organizations. In response to such an idea, a government official noted, "It is not being discussed."
◇ The trend of decreased business site subscribers... expected to transition to deficits by 2041
Meanwhile, the number of National Pension subscribers is rapidly declining due to the effects of low birth rates. According to published statistics as of October 2024, the total number of National Pension subscribers was 21,812,216 as of the end of October last year, which is a decrease of more than 570,000 compared to the end of 2023. Although statistics for November and December are not yet available, if this trend continues, a decrease in the total number of subscribers in 2024, following the decline in 2023, is certain. The decline is expected to be larger than the decrease of 113,000 in 2023.
The number of business site subscribers, which had steadily increased, is expected to have turned to a decrease last year. As of the end of October last year, there were 14,726,094 business site subscribers. This is a reduction of 85,968 compared to 14,812,062 at the end of October 2023. The number of subscribing business sites decreased from 2.32 million at the end of 2023 to 2.267 million as of last October.
While the number of subscribers is decreasing, the number of recipients is rapidly increasing. As of October last year, there were 7,235,901 National Pension recipients, an increase of 413,723 compared to the previous year. Government estimates suggest that if the current trend continues, the National Pension fund will turn to a deficit by 2041 and be depleted by 2056.