On June 15, Ando Geol, a lawmaker from the Democratic Party of Korea, announced plans to propose a bill introducing a 'fund-type retirement pension system' aimed at enhancing returns and supporting stable post-retirement life.
The core of the bill is to shift away from the current contract-based retirement pension management system to an 'integrated fund-type' model, in which experts manage the retirement pension assets of multiple subscribers collectively. The plan envisions establishing funds of at least 50 trillion won each, introducing a fund-type retirement pension system equipped with a professional asset management system and long-term diversified investment strategies comparable to the National Pension Service.
According to Ando Geol, although retirement pensions serve as a 'second pension' to protect people’s post-retirement lives, they are losing their function due to low returns, poor subscription rates, and frequent lump-sum or mid-term withdrawals. He explained, "About 82.6% of retirement pension assets are managed in principal-guaranteed products, resulting in an average return of only 2.93% over the past five years, whereas the National Pension Service achieved a return of 8.17% during the same period, showing a significant gap."
The fund management would be handled by an 'expert fund management organization' with independence and professionalism. Specific operational plans under consideration include: establishing a fund management organization as a consortium of existing pension providers; entrusting management to the National Pension Service; and creating dedicated trustee corporations by company or industry. Another option being discussed is to establish an expert organization by separating the public retirement pension management function from the Korea Workers’ Compensation and Welfare Service.
Ando Geol stated, "After gathering feedback from relevant ministries and stakeholders, including the Ministry of Employment and Labor, the Financial Services Commission, and the Ministry of Economy and Finance, I will promptly submit the retirement pension reform bill." He further emphasized, "By introducing the fund-type retirement pension system, we must dramatically improve the returns on retirement pensions, which are expected to reach 1,042 trillion won by 2034, and increase subscription rates so that retirement income can be more than double the current level."
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