"Returns have surged so much amid the domestic stock market rally that my equity allocation has grown far beyond plan. Should I sell some now and rebalance?" On October 28, a Korea Investment & Securities retirement pension consultation booth set up at a cafe inside an office building in Jongno, Seoul, was crowded during lunchtime with workers seeking advice on managing their retirement pensions. They consulted on asset allocation strategies, whether to transfer retirement pensions held at other brokerages, and whether to switch from defined benefit (DB) to defined contribution (DC) plans.
A retirement pension recruiter at Korea Investment & Securities said, "In the past, many people would park their retirement pension like a deposit and forget about it, but recently the number of subscribers wanting to manage it directly has increased significantly. In particular, there are many inquiries about rebalancing strategies, in-kind transfers, and whether they can switch from DB to DC plans."
This shift is reflected in the structure of the retirement pension market itself. According to the Financial Supervisory Service (FSS) on the 3rd, retirement pension reserves stood at 501.4 trillion won at the end of last year, surpassing 500 trillion won for the first time. Of this, exchange-traded fund (ETF) investments amounted to 48.7 trillion won, accounting for about 40% of performance-based assets. Having more than doubled for three consecutive years, the industry expects the market could expand to 100 trillion won within the year. With first-quarter retirement pension reserves this year (based on 42 operators, excluding the Korea Workers' Compensation & Welfare Service) growing to 508.7326 trillion won, ETF investments are expected to increase further.
Subscriber interest in the retirement pension system itself has also grown. This is because most major corporations still maintain DB plans, in which the company is responsible for managing the funds. Kim, 30, an employee at a major corporation operating under a DB plan, said, "Among younger employees, there is a continuous push to the union to switch to DC plans. In a bull market like this, you feel left behind if you're not managing it directly."
Indeed, the center of gravity in the retirement pension market is shifting from DB plans to DC plans and individual retirement pensions (IRPs). The share of DB plans shrank from 49.7% in 2024 to 46.1% last year and 43.6% in the first quarter of this year. By contrast, the IRP share expanded from 22.9% to 26.3% to 28.3% over the same period. Notably, IRP reserves last year reached 130.9 trillion won, up 32.6% from the previous year, marking the highest growth rate among retirement pension types. The DC share also rose from 27.4% to 27.6% to 28.1%.
The industry points to ETFs as the driving force behind this change. Subscribers who once stayed with principal- and interest-guaranteed products have begun using ETFs to allocate assets and manage returns directly, raising the appeal of DC plans and IRPs as well. This means retirement pensions are no longer perceived as "savings accounts" but as "investment accounts." Min Ju-young, executive director of the pension business division at Shinyoung Securities, said, "Active ETF investment in DC plans and IRPs is possible because real-time trading enables nimble responses to market changes, and low management fees can enhance long-term compounding effects."
In particular, when investing in overseas index ETFs, the tax deferral effect — in which dividend income tax can be postponed until the time of pension receipt — is also cited as an attractive factor for pension investors. The industry assesses that with these tax benefits combined with management convenience, retirement pensions are rapidly transforming from "neglected assets" into "investment assets."
The retirement pension in-kind transfer system, introduced in 2024, is also adding momentum to this change. As subscribers can now move existing products to another financial company without selling them, more subscribers seeking active asset management are switching providers. An industry official said, "In the past, many people didn't even know where their retirement pension was registered, but recently more subscribers are switching financial companies after comparing returns and service levels."
