Korea's retirement pension market posted its largest-ever growth in the second quarter of this year, driven by a stock market rally. Total assets surpassed 550 trillion won for the first time, while one-year returns on performance-based products topped 100 percent. Contrary to expectations that securities firms with diverse investment products would deliver the highest returns, some insurers and regional banks swept the top rankings, drawing attention.
According to the Financial Supervisory Service's retirement pension comparison disclosure on the 25th, total assets held by 43 domestic retirement pension providers reached 553.8779 trillion won in the second quarter of this year, up about 45 trillion won from the previous quarter's 508.7341 trillion won, a record high.
The inflow of funds was led by defined contribution (DC) plans, managed directly by subscribers, and individual retirement pensions (IRP). DC assets rose by 20.1399 trillion won and IRP by 22.618 trillion won, while defined benefit (DB) plans, managed by companies, increased by only 2.38 trillion won. Assets in the securities industry also grew from 141 trillion won to 165 trillion won, absorbing about half of the total increase.
Amid the strong stock market, returns on performance-based products jumped sharply. One-year returns on securities firms' DC-type non-principal-guaranteed products ranged from 34 to 66 percent, about 10 times higher than the 4 to 8 percent in the same period last year. iM Securities recorded the highest at 66.24 percent, followed by Hyundai Motor Securities (66.12 percent), KB Securities (60.13 percent), NH Investment & Securities (56.65 percent), Samsung Securities (56.03 percent), Shinhan Securities (55.99 percent) and Mirae Asset Securities (50.41 percent). IRP also recorded returns in the 40 to 50 percent range, led by Hana Securities (54.91 percent) and KB Securities (52.98 percent).
By contrast, principal-guaranteed products stayed at returns of 2 to 3 percent, near market interest rates, showing a difference of nearly 20 times compared with performance-based products.
Insurers, Banks Top Returns, Outpacing Securities Firms
By provider, the results were unexpected. Some insurers and banks recorded higher returns than securities firms, which offer more diverse investment products.
For DB-type non-principal-guaranteed products, IBK Pension Insurance had the highest one-year return among all providers at 141.92 percent. It was followed by DB Life (68.74 percent) and Kwangju Bank (60.73 percent). However, their assets were relatively small at 2.2 billion won, 4.2 billion won and 19.5 billion won, respectively.
In DC-type products, Shinhan Life took first place at 111.17 percent. It was followed by IBK Pension Insurance (76.98 percent) and Fubon Hyundai Life (73.80 percent), with insurers taking the top spots. Among securities firms, iM Securities recorded the highest return at 66.24 percent.
For IRP, Busan Bank posted the highest return at 68.80 percent. IBK Pension Insurance (68.42 percent) and Kwangju Bank (66.68 percent) followed, while among securities firms, Hana Securities was highest at 54.91 percent.
Even when narrowing the scope to providers with assets of 100 billion won or more, banks and insurers remained strong. In DB-type products, Busan Bank (29.04 percent), Industrial Bank of Korea (28.48 percent) and Nonghyup Bank (25.04 percent) took the top spots. In DC-type products, Hyundai Motor Securities (66.12 percent) ranked first, but Busan Bank (65.08 percent) and KB Insurance (61.67 percent) followed.
"Product Diversity ≠ Returns"...Long-Term Performance Matters More
In the retirement pension market, funds have recently been shifting rapidly to securities firms. As of the second quarter of this year, securities firms' market share was 29.5 percent, up 7.5 percentage points from 22 percent in 2022. Insurers, by contrast, fell from 25.9 percent to 19.2 percent over the same period.
However, experts point out that having many investment products does not necessarily lead to higher returns. Among providers with assets of 100 billion won or more, Busan Bank recorded the highest five-year returns on non-principal-guaranteed products across DB, DC and IRP plans.
Although second-quarter returns jumped significantly amid the stock market boom, advisers say investors should consider long-term management performance and investment strategy together, rather than choosing a provider based solely on short-term results.
