At the end of last year, the domestic retirement pension reserve surpassed 400 trillion won for the first time since the system was introduced. The amount invested in performance-based products such as funds and exchange-traded funds (ETFs) increased by 53.3% compared to the previous year, leading the growth of retirement pension reserves.
On the 9th, the Financial Supervisory Service and the Ministry of Employment and Labor published the 'Retirement Pension Investment White Paper' and revealed that last year's retirement pension reserves increased by 49.3 trillion won (12.9%) year-on-year, reaching 431.7 trillion won.
By type of system, defined benefit (DB) plans accounted for the largest share, with 214.6 trillion won reserved, while defined contribution (DC) and corporate-type individual retirement plans (IRP) recorded 118.4 trillion won. Individual IRP reserves stood at 98.7 trillion won.
By management method, guaranteed principal and interest accounts comprised 356.5 trillion won, while performance-based accounts made up 75.2 trillion won, accounting for 82.6% and 17.4%, respectively. Among performance-based products, funds saw the highest rankings for target date funds (TDF), and ETF products focused on those tracking U.S. market indices.
Last year's retirement pension revenue was recorded at 4.77%. This is a significant increase compared to the annualized revenue of 2.85% over the past five years and 2.31% over the past ten years. By sector, the highest revenue was seen in securities firms' products, whereas 84.7% of banks and 77.6% of insurance companies were in the revenue range below 4%, compared to only 39.1% in securities firms.
In contrast, the proportion of securities firms with annual revenue exceeding 10% reached 31.7%. Banks and insurance companies remained at 5.2% and 4.1%, respectively.
The FSS noted, 'Recent subscribers have begun to pay attention to both stability and revenue enhancement,' adding, 'It is evaluated that the retirement pension revenue is gradually improving by managing reserves with performance-based products.'
It further stated, 'Recently, fintech companies using robo-advisors (RA) have been designated as innovative businesses, and it has become possible to allow investment delegation limited to IRP through partnerships with retirement pension operators.' It added, 'I hope people will consider using this system when they want to increase expected revenue and achieve stable investment results.'