As the Ministry of Employment and Labor pursues institutional reforms in the second half of this year, including the introduction of fund-type retirement pensions and mandatory retirement pension enrollment, it will also revise the default option (pre-designated asset management system). Plans to improve the waiting period required to apply the default option and the product evaluation system, as well as to expand the scope of application to funds currently excluded from the system, are being reviewed.
At a forum titled 'Default Options at Three Years: Conditions for Fund-Type Retirement Pension Success' held at the National Assembly on the 7th, Nam Sung-wook, director of the Retirement Pension Welfare Division at the Ministry of Employment and Labor, stated that 'the revision of default options will also be pursued in parallel in the second half of this year.' Specifically, the evaluation system for default option products will be clarified, including the waiting period, and institutional gaps will be supplemented by expanding the scope of application to funds not currently covered.
However, the ministry maintains that parliamentary discussion is necessary to overhaul the framework of the system, such as changing the current method in which subscribers directly designate their default option or deciding whether to include capital-guaranteed products in the default option. Director Nam explained, 'The designation method and the portion involving capital-guaranteed products are matters that require national consensus at least in the National Assembly,' and added, 'When the default option was introduced in 2022, there were discussions about these two issues in the National Assembly.'
The concentration of default option funds in conservative strategies is also identified as an issue to be addressed in the revision process. According to data presented at the forum, default option accumulated funds at the end of last year totaled 53.3 trillion won, representing 19.56% of all defined contribution (DC) and individual retirement pension (IRP) accumulated funds. Among these, the proportion of conservative strategies reached 85.4% at the end of last year and remained above 80% at 82.5% even at the end of June this year.
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Director Nam said, 'The major institutional reform is not just fund-type implementation, but mandatory retirement pension enrollment and mandatory external accumulation of retirement benefits,' and added, 'The second half of this year seems to be a period of major transformation in retirement pensions.'
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This major transformation in retirement pensions..... I really hope it doesn't end up creating a disaster.
I get the sense they're trying to push this through because people are fed up with the current system.
▶ Source: https://news.nate.com/view/20260907n28726?mid=n0203
