Hantoo Asset Management "Retirement Pension Market Expected to Reach 860 Trillion Won in 10 Years"

[Asia Economy Reporter Park So-yeon] The domestic retirement pension market is projected to grow to around 860 trillion won in 10 years.

According to the retirement pension market forecast data released by Korea Investment Trust Management on the 22nd, the retirement pension market, which was at about 336 trillion won at the end of last year, is expected to grow approximately 2.6 times to 860 trillion won by 2032.

Korea Investment Trust Management annually publishes data on the current status and outlook of the retirement pension market by considering factors such as the number of retirement pension subscribers, years of service, total monthly wages, and long-term returns.

By retirement pension system, the defined benefit (DB) plan is expected to grow from 192 trillion won to 398 trillion won, the defined contribution (DC) plan from 86 trillion won to 222 trillion won, and the individual retirement pension (IRP) from 58 trillion won to 239 trillion won.

Notably, the growth rate of IRP (4.1 times) stands out compared to DB (2.1 times) and DC (2.6 times).

Kim Seok-jin, head of OCIO Consulting at Korea Investment Trust Management, said, "The main driver of retirement pension market growth over the next 10 years will be IRP," adding, "IRP, which accounted for 17.2% of the total retirement pensions at the end of last year, is expected to increase its share to 27.8% by 2032 due to factors such as the domestic population structure."

Korea Investment Trust Management attributes the sharp increase in IRP to 'aging.' As of the end of last year, the domestic population aged 15 and over was 45.7 million, and those aged 60 and over were 13.2 million. These populations are estimated to increase to 47 million and 18.3 million, respectively, by 2032.

Kim explained, "As the relatively older population increases more significantly, the IRP market, which has a higher proportion of job changers and retirees compared to DB and DC plans, is likely to grow the fastest."

By management method, performance-based products are expected to increase from 38 trillion won to 243 trillion won, and principal-guaranteed products from 298 trillion won to 617 trillion won. In particular, following the enforcement of the amendment to the Enforcement Decree of the Employee Retirement Benefit Security Act in April last year, which made it mandatory for companies with 300 or more employees to introduce an Investment Policy Statement (IPS) for DB-type retirement pensions, it is anticipated that companies operating DB-type retirement pensions will increase their investments in performance-based products.