Financial Supervisory Service Requests Samsung Life to Enhance 'Retirement Pension Risk Management'

[Asia Economy Reporter Seongpil Cho] Samsung Life Insurance has been instructed by the Financial Supervisory Service (FSS) to manage business risks related to retirement pensions.

According to financial authorities on the 22nd, the FSS recently conducted an inspection of Samsung Life Insurance and notified the company of two business caution points and six improvement items, stating the need to strengthen internal controls over managing business risks related to severance pay and the financial verification of retirement pensions.

The FSS pointed out that Samsung Life Insurance failed to report to management the monitoring results regarding the reserves and fee ratios of affiliates related to retirement pensions, which requires caution. It also urged the company to develop management strategies to enhance the business competitiveness of the retirement pension sector by moving away from an affiliate-centered profit base. Samsung Life was also criticized for conducting committee operations related to retirement pensions primarily through written resolutions without holding face-to-face meetings or preparing and storing minutes during such meetings.

The FSS indicated that Samsung Life Insurance needs to reasonably improve the subscription procedures and the process of presenting reserve fund management products to ensure subscribers’ freedom of choice, such as offering a variety of products even when new individual retirement pension (IRP) subscriptions are made through non-face-to-face methods. It was also found that Samsung Life’s management processes to reduce complaints and prevent recurrence of similar complaint types related to retirement pensions were insufficient.

Additionally, during an inspection of the Industrial Bank of Korea, the FSS detected deficiencies in internal regulations and procedures for managing unpaid reserves related to closed businesses and their employees among retirement pension contracts, as well as inadequate customer guidance, and issued a business caution.