Retirement pension reserves have exceeded 500 trillion won, but a significant portion remains concentrated in deposit-type products. Despite being long-term funds for retirement, structural issues have persisted due to inadequate systems and services.
According to the Financial Supervisory Service, as of the first quarter of this year, retirement pension reserves totaled approximately 508 trillion won. Of this amount, 363 trillion won, or 71.3%, was invested in guaranteed deposit products. While this figure has slightly decreased from 75.4% at the end of last year, the majority of funds are still concentrated in guaranteed products.
However, there is a stark contrast in returns. The average yield for guaranteed products in the first quarter was only 2.89%, while non-guaranteed products yielded 18.89%, a difference of 6.5 times.
Non-guaranteed products also outperformed in long-term returns. Over three years, guaranteed products yielded 3.52%, compared to 11.40% for non-guaranteed products. In comparisons over five, seven, and ten years, non-guaranteed products consistently outperformed by at least double.
This disparity is attributed to the compounding effect of long-term investments, which reflects the growth potential of performance-based assets like stocks and bonds. In the short term, the strong performance of the KOSPI index since last year has significantly boosted yields.
The concern is that a portfolio heavily weighted toward guaranteed products may hinder the formation of retirement assets. Since retirement pensions are long-term investment products managed over decades, long-term returns are more critical than short-term volatility. A concentration in deposit-type products makes it difficult to fully benefit from compounding effects.
A comparative analysis of actual product yields by the Financial Supervisory Service found that if an individual contributed 10 million won annually for 20 years (from 2006 to 2025) and actively allocated assets, they could receive approximately 430 million won in retirement pension. In contrast, if managed through guaranteed products, the payout would only be about 270 million won, resulting in a 1.6-fold difference based on the same contribution amount.
However, it is argued that this issue cannot be solely attributed to a lack of individual interest. Although retirement pensions are representative long-term funds, a system encouraging long-term investment has not been properly established.
The effectiveness of default options and target date funds (TDF) has also been limited. Default options allow for automatic management of contributions, but most funds (85.4%) are skewed toward stable options, resulting in a mere 3.7% yield last year. Analysts suggest that financial institutions have focused more on securing the size of reserves rather than fostering a culture of active asset allocation.
A financial authority official stated, "We will continue to improve the system by evaluating products after a certain period to enhance default option yields. Additionally, we will support the introduction of a fund-type retirement pension system to assist participants who find direct management challenging with the help of professional custodians."
* This article has been translated by AI.
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