Mirae Asset Securities (006800) is raising the interest rate on its military pension protection account by 0.15 percentage point. The move is seen as an effort to expand the brokerage's wealth management (WM) client base after becoming the first securities firm in Korea to enter the public pension market.
Mirae Asset Securities will lift both the deposit usage fee rate and the preferential yield on its military pension protection cash management account (CMA) to an annual 2.75% from 2.60%, effective through Dec. 31 of this year, according to the financial investment industry on the 9th. "The rate was raised in line with the increase in the base rate, and the higher rate could be extended again," an official at Mirae Asset Securities said. The Bank of Korea raised its base rate by 0.25 percentage point to 3.00% from 2.75% on the 27th of last month.
Launched by Mirae Asset Securities in 2019, the military pension protection account is a separate account that shields deposits from creditor seizure up to the minimum cost of living set under the Civil Execution Act, or 1.85 million won, thereby safeguarding the basic livelihood of military pension recipients. Only pension payments disbursed by the Armed Forces Financial Management Corps can be deposited into the account. Any amount exceeding 1.85 million won a month must be received in a regular account instead.
Mirae Asset Securities is the only firm in the domestic securities industry offering such a product. Its CMA structure in particular is seen as setting it apart from commercial banks. Most military pension protection accounts offered by banks take the form of demand deposit accounts, with rates of around 0.5%, making them closer to a place to simply park principal. A CMA, by contrast, is an account in which a brokerage invests client funds in financial products such as government and public bonds, short-term corporate bonds, certificates of deposit (CDs) and repurchase agreements (RPs), and returns the proceeds to the investor. Because returns accrue even for a single day of deposit, subscribers can expect a modest amount of interest income.
Mirae Asset Securities views the account favorably as another channel for expanding the WM market, even though its pool of eligible subscribers is limited compared with other products. The company appears to be betting that broadening its presence in the public pension market will help it secure additional potential WM clients and strengthen its standing in the pension business.
