The government has publicly disclosed the operational status of the pre-designated management system (default option) for retirement pensions, revealing that both the accumulated funds and the number of subscribers have steadily increased since the system’s introduction. However, the analysis shows that, as funds have been concentrated mainly in principal-guaranteed, stable products, the overall rate of return has actually decreased.
According to the Ministry of Employment and Labor and the Financial Supervisory Service on February 27, as of the end of 2025, the accumulated funds managed under the default option reached 53.3 trillion won, marking a 32.9% increase compared to the previous year. The number of designated subscribers grew by 16.3% over the same period, reaching 7.34 million.
The default option is a system that automatically manages assets in a pre-designated manner if the retirement pension subscriber does not provide investment instructions for a certain period. The system was implemented in July 2023 to address the issue of long-term stagnation in low-yield products and to improve long-term returns.
By type of plan, defined contribution (DC) plans had accumulated funds of 34.3 trillion won, while individual retirement pensions (IRP) accounted for 19 trillion won. Notably, IRP funds increased by 54.5% in one year, recording the highest growth rate among the categories.
Annual returns by investment type over the past year were 14.9% for aggressive investment, 10.8% for neutral investment, 7.5% for stable investment, and 2.6% for principal-guaranteed (stable) products. While aggressive and neutral investment types achieved double-digit returns, the overall average return remained at 3.7%. This was attributed to the fact that 85% of the accumulated funds and 79% of subscribers are concentrated in stable products.
Stable products consist of time deposits and principal-guaranteed insurance, which are structured to yield relatively low returns. The returns for these products remained only slightly above the consumer price inflation rate during the same period.
In the financial sector, the number of default option-approved products has expanded to 319 products across 41 financial institutions, and target returns and risk levels are differentiated by investment type. Authorities emphasized the need to expand asset allocation investments in order to foster the long-term growth of retirement assets.
Accordingly, the government is also pursuing improvements to the system. It has changed risk-focused names such as “ultra-low risk” and “low risk” to “stable,” “stable investment,” “neutral investment,” and “aggressive investment” to enhance subscribers’ understanding. In addition, the government has included the proportion of risk grades sold by each financial institution in the public disclosures, thereby revealing the concentration in stable products and encouraging financial institutions to strengthen their subscriber support functions.
The government stated, “We will continue to improve the system so that retirement pensions can make a tangible contribution to ensuring workers’ financial security in retirement,” and added, “We will provide transparent information on the default option through quarterly disclosures.”
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