Korean Air is drawing intense attention from the financial sector as it moves to formally review adopting a corporate pension system ahead of its merger with Asiana Airlines. With the potential transfer of trillions of won in assets, competition among pension providers including securities firms and insurers is heating up.
According to the financial investment industry on the 4th, Korean Air has placed a proposal titled "Amendments in Preparation for Corporate Pension System Adoption" on the agenda for its shareholders' meeting later this month. A Korean Air official explained, "This requires shareholder approval," adding that "the need to unify systems in the event of a merger with Asiana Airlines is also a factor behind this review."
The move is interpreted as Korean Air preparing for system changes ahead of its merger with Asiana Airlines, expected as early as the end of this year. Since Asiana Airlines already operates a corporate pension system, the two companies will need to unify their systems after merging.
Analysts also suggest Korean Air is proactively reviewing the system transition in line with the government and ruling party's push to mandate corporate pensions. The government and ruling party recently announced plans to legislate within this year measures to mandate corporate pensions for all workplaces and convert them into a fund structure similar to the National Pension. The goal is to have all workplaces operate corporate pension systems with external reserves, rather than the traditional severance pay system where funds accumulate internally.
The market expects a large-scale transfer of funds to the financial sector if Korean Air converts to a corporate pension system. As of the end of 2024, Korean Air had approximately 18,000 employees. The average annual salary per employee was approximately 113 million won, and net defined benefit liabilities stood at 2.5588 trillion won.
Net defined benefit liabilities represent the net present value of future severance payments owed for employees' service periods. Analysts suggest that converting to a corporate pension system could result in the transfer of over 2 trillion won in accumulated severance payment obligations. For financial companies, this represents securing a major client whose assets can be managed stably over the long term.
Consequently, behind-the-scenes competition among pension providers including securities firms and insurers is reportedly intensifying over Korean Air's selection of a provider. An industry official said, "Korean Air is considered a prime 'big catch' in terms of scale and symbolic significance," adding that "given it's a client the pension market cannot afford to miss, efforts to win the account are already in full swing."