[Retirement Pension Paradigm Shift]③ “Remember the Retirement Pension ‘Rock and Roll’ for a Prosperous Old Age”

Interview with Yujeonghwa, Head of Pension Division at Samsung Securities
Don't Withdraw, Add to Your Pension Account, and Keep It Growing Without Rest

"The success of retirement stability after retirement depends on the management of pensions. It is advisable to avoid early withdrawals until the retirement point and to manage pension assets over the long term."

Samsung Securities ranked first in two categories (ultra-low risk, low risk) for the 3-month returns of the Default Option products announced by the Ministry of Employment and Labor in the first quarter of this year, and also took first place in the second quarter’s defined contribution (DC) pension non-guaranteed principal return disclosure (Financial Supervisory Service Integrated Pension Portal). At the end of the second quarter, Samsung Securities recorded returns of 8.54% and 8.12% in the DC type and Individual Retirement Pension (IRP) respectively for the non-guaranteed principal standard and recent 1-year returns. This is the first and third place among all pension providers including securities firms, banks, and insurance companies.

Yoo Jeong-hwa, Head of the Pension Division (Executive Director) at Samsung Securities, who led these achievements, recently told Asia Economy, "This is the result of investing the most resources in selecting products during the preparation process for the Default Option."

Because pensions have a long-term investment nature, product selection prioritized how steadily returns have been accumulated rather than short-term performance. Yoo said, "Among products with low volatility and fees, those with a stable track record were managed as a universe, and during the product formation process, we coordinated differences through a working-level consultative body with our research and product departments," adding, "After meeting with the asset managers of the selected products and forming a consensus on their investment philosophy and direction, we made the decision."

He emphasized that to manage retirement pensions well, one should remember 'Lock & Roll.' 'Lock' means making the most of the pension’s locking mechanism. Yoo said, "No matter how urgent it is to save for old age, it is important to lock the funds so they cannot be withdrawn," emphasizing, "The first step in pension management is never to withdraw funds invested in pensions and to receive them as pension payments after retirement."

'And' means adding pension accounts. The accounts that allow pension savings with tax deductions are Pension Savings and IRP. Yoo recommended, "If you only have Pension Savings, create an IRP; if you only have an IRP, create Pension Savings to have a purpose for accumulating pension accounts," advising, "Money accumulated in Pension Savings should be actively invested with the longest possible management period, and IRP should be managed somewhat conservatively if retirement is near, or actively if retirement is far, while maximizing the use of stable products such as deposits and bonds." By dividing pension accounts, one can adjust the timing of receipt and flexibly respond even when a lump sum is needed.

'Roll' means keeping the pension actively invested. Both Pension Savings and IRP are accounts that can invest in various products. Yoo explained, "These are assets where the basic investment principle of 'buying time,' which allows long-term management with annual tax benefits, is perfectly applied," adding, "You can choose pension products such as Target Date Funds (TDF) that automatically manage your assets, low-fee Exchange-Traded Funds (ETF) that allow sector-specific investments, and REITs that invest in real estate with small amounts and pay dividends." He continued, "The system is also improving as your retirement becomes more prosperous, so if you let your currently idle pension actively run, you can enjoy a lively 'Lock & Roll' in your retirement."