Nae Jae-cheol, Chairman of the Korea Financial Investment Association, "The Era of Pension Wealth Opens with Default Options"

[Asia Economy Reporter Junho Hwang] "The path to becoming a pension millionaire has opened."

On the 26th, Na Jae-cheol, chairman of the Korea Financial Investment Association, stated at an online New Year's press conference that the introduction of the default option (pre-designated management system) scheduled for July will mark the beginning of the retirement pension investment era by introducing the default option to DC-type and IRP-type retirement pensions.

He explained, "We will strive to develop qualified-type products centered on subscribers," and added, "We will prepare preventive measures to ensure that subscriber protection is thoroughly applied through the Financial Consumer Act."

The default option is a system where, if a retirement pension subscriber does not express a separate intention, the financial company manages the pension assets in a pre-determined manner. Defined Contribution (DC) type retirement pension subscribers must enroll starting in June, and Individual Retirement Pension (IRP) subscribers may enroll if they wish. The products allowed under the default option include five types: Target Date Funds (TDF), Money Market Funds (MMF), Real Estate Infrastructure Funds, Long-term Value Appreciation Pursuit Funds, and Principal Guaranteed Products.

Chairman Na anticipated an improvement in investors' pension returns with the introduction of the default option. He emphasized, "Through fierce competition among financial companies, subscribers' returns will be dramatically improved, and a virtuous cycle structure will be established where retirement pensions flow into the real economy. We will benchmark advanced pension countries that introduced the default option early to increase returns so that many pension millionaires emerge."

Additionally, Chairman Na announced plans to introduce a Junior ISA to support youth asset formation. He diagnosed, "Interest in youth asset formation is increasing, but to effectively support this, it is essential to actively provide tax benefits like in the UK and Japan. The introduction of a 'Junior ISA' that encourages financial interest and asset accumulation from a young age is essential."

Regarding short selling, he emphasized 'improvement' rather than 'expulsion.' Chairman Na said, "The financial investment industry continues efforts to increase individual investors' accessibility to short selling and improve trading convenience. We will closely review reasonable institutional reform plans with market participants to improve the short selling system for individual investors so that our stock market can grow further."