75.3% of Products Transferred as Is Between Accounts
KRW 798.9 Billion Moved from Banks to Banks
Securities Firms See Net Inflow of KRW 405.1 Billion
It has been revealed that 2.4 trillion KRW of accumulated funds were transferred within three months after the implementation of the retirement pension in-kind transfer system. Many cases involved moving products operated within the account to another institution as they were, and securities firms stood out in terms of net inflow amounts.
The Ministry of Employment and Labor and the Financial Supervisory Service announced on the 23rd that there were a total of 39,000 in-kind transfers over three months until last month after launching the retirement pension in-kind transfer service in October last year. As a result, the transferred accumulated funds amounted to approximately 2.4 trillion KRW.
An in-kind transfer refers to moving products operated by a retirement pension subscriber within an account to another retirement pension service provider’s account without selling (cancelling) them. The government introduced this system to minimize subscriber losses while encouraging competition among retirement pension service providers to improve yields.
During the three months after the system’s implementation, 75.3% (1.8 trillion KRW) of the transferred accumulated funds were products operated within the account that were transferred as they were. The remaining 600 billion KRW (24.7%) was converted into cash through product sales or cancellations due to reasons that made in-kind transfer impossible.
Among the accumulated funds transferred through the in-kind transfer service, inter-bank transfers accounted for the largest scale at 798.9 billion KRW. Transfers from banks to securities firms amounted to 649.1 billion KRW, and transfers between securities firms totaled 411.3 billion KRW. In terms of the number of cases, the order of scale was banks to banks (16,635 cases), banks to securities firms (14,003 cases), and securities firms to securities firms (6,350 cases).
Looking at net inflow amounts due to transfers, there was an overall increase in movement toward securities firms. Securities firms recorded a net increase of 405.1 billion KRW, and insurance companies saw a net increase of 56 billion KRW, while banks experienced a net outflow of 461.1 billion KRW.
By retirement pension system, transfers appeared to proceed evenly without concentration on a specific system. Among the transferred accumulated funds, individual retirement pensions (IRP) accounted for the highest proportion at 922.9 billion KRW, or 38.4%. Defined benefit (DB) plans accounted for 871.8 billion KRW (36.2%), and defined contribution (DC, including corporate IRP) plans recorded 611.1 billion KRW (25.4%).
Based on net inflow amounts by system, securities firms saw net increases of 375.3 billion KRW and 211.5 billion KRW for IRP and DC, respectively, while insurance companies and banks recorded net increases of 105 billion KRW and 76.8 billion KRW for DB, respectively. This shows that preferred retirement pension service provider sectors differ depending on the operating entity.
The Ministry of Employment and Labor and the Financial Supervisory Service plan to enhance subscriber convenience for those wishing to make in-kind transfers by developing and introducing a "pre-inquiry service" in the first half of the year that allows checking the possibility of in-kind transfer of products held within the account before applying for the transfer.
They also plan to enable in-kind transfers from DC accounts to other companies’ IRP accounts. This aims to expand subscribers’ choice of financial institutions and promote performance competition among financial institutions to improve yields.
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