Hanwha Asset Management's DB Retirement Pension Entrusted Private Fund Net Assets Surpass 1 Trillion Won

Hanwha Asset Management announced on July 3 that the total net assets of its privately placed funds entrusted with defined benefit (DB) retirement pension management have surpassed 1 trillion won. This achievement comes a year and six months after the company officially entered the DB retirement pension business at the end of 2023.

As of the end of last month, Hanwha Asset Management's DB retirement pension entrusted private fund assets stood at 1.0224 trillion won. Retirement pensions are divided into defined benefit (DB) and defined contribution (DC) types. In the DB type, the company contracts with a financial institution to manage the reserves, and when an asset management firm is entrusted with DB reserves, it can only invest in performance-based products.

Hanwha Asset Management has been able to stand out in the DB retirement pension market thanks to its differentiated products and consulting expertise. The company has continuously developed new products that help ease the burden of performance-based investments for clients. In addition, it has strengthened its consulting capabilities so that clients can clearly and easily understand its management strategies and investment processes.

The performance-based products in which Hanwha Asset Management excels are a key issue in the retirement pension market. According to the Korea Capital Market Institute, the retirement pension market, which was valued at 427 trillion won at the end of last year, is expected to grow to 1,000 trillion won by 2037. As the market size increases, concerns about returns are also deepening.

According to the Ministry of Employment and Labor, the return on DB retirement pension products in 2024 was only 4.04%. This is lower than the 5.18% for DC products and 5.86% for individual retirement pensions (IRP). Nine out of ten DB retirement pension managers operate more than 90% of their reserves in principal-guaranteed products.

Choi Youngjin, Head of Marketing at Hanwha Asset Management, stated, "If the returns on retirement pensions cannot be improved, the burden may be shifted to the government or future generations," adding, "Performance-based investment is necessary to improve returns, but due to concerns about volatility, client participation remains low."

Hanwha Asset Management is providing differentiated solutions through its dedicated retirement pension team, such as publishing DB retirement pension guidebooks and ALM (Asset-Liability Management) guidebooks. The company is also working to advance its management by launching funds that utilize advanced strategies like ALM.

ALM is a management method designed to stably maintain the gap between pension assets and liabilities amid various changes such as interest rates, inflation, and liquidity, thereby easing clients' management burdens. Hanwha Asset Management is currently managing funds entrusted by multiple companies using the ALM strategy.

Choi added, "Hanwha Asset Management is rapidly pioneering the market and contributing to the qualitative growth of the retirement pension sector by developing customized solutions that can ease clients' burdens and by strengthening our client consulting capabilities."