Key Takeaways
- • The Korean government unveiled its "Plan to Strengthen Retirement Pension Functions" on October 29, 2026, mandating retirement pensions for all workplaces by 2030 and introducing a fund-type retirement pension system.
- • The plan gradually eases the 70% limit on risky assets, but only for Individual Retirement Pensions (IRPs) among contract-type plans, which industry players see as a boost to performance-linked products and securities firms.
- • Securities firms face a dual outlook: new business opportunities from fund-type pensions, alongside intensifying competition if the National Pension Service (NPS) enters the retirement pension market as an open operator.
- • Major securities firms affiliated with bank holding companies are expected to join the financial institution open category by forming consortiums with affiliated banks and insurers to build synergies and grow pension assets.
- • Small and mid-sized securities firms plan to compete as contract-type operators by offering higher returns, differentiated portfolios, and customer services.
Summary
The South Korean securities industry is reassessing its strategy after the government announced its "Plan to Strengthen Retirement Pension Functions" on Thursday, October 29. According to the plan, retirement pensions will be mandated for all workplaces by 2030. To improve the professionalism of retirement pension management, the government will introduce a fund-type system. It will also gradually ease the 70% limit on risky assets, but only for Individual Retirement Pensions (IRPs) within contract-type plans, according to the plan as reported by Money Today (MT).
Reactions across the financial investment industry are mixed. Supporters view the measures as a way to grow retirement pension reserves, improve returns, and protect workers' rights to receive benefits. However, there is significant concern about the entry of the National Pension Service (NPS). An official at a major securities firm said that fund-type retirement pensions "may create new business opportunities, but competition will become fierce." Industry officials warn that if the NPS enters as an open operator for public institutions, financial institution open and joint operators could face economies-of-scale disadvantages. Opinions differ among labor, management, government, and experts on the method and scope of NPS participation, and one official said National Assembly-level discussion will be necessary.
Securities firms affiliated with bank holding companies are expected to be active in the financial institution open category, where private institutions establish separate trustee corporations. A securities firm, bank, and insurer within the same financial holding group could form a consortium to create a trustee corporation, generating affiliate synergies and expanding retirement pension management assets. Relatively disadvantaged major securities firms are likely to wait and observe market trends during the early stages of the fund-type introduction. Small and mid-sized firms are expected to focus on strengthening their competitiveness as contract-type operators.
The easing of risky asset limits has drawn positive reactions. The industry expects retirement pension flows toward performance-linked products and the securities sector to accelerate. Allowing Investment Management Accounts (IMAs) and issued notes as investment products for Defined Contribution (DC) plans and IRPs is seen as broadening investor choice and expanding demand for these products. Choi Jong-jin, Head of the Pension Innovation Division at Korea Investment & Securities, said that as pension investors increasingly use the capital market, workers can share in capital market growth, and that shifting retirement assets from deposits and savings toward investment markets could help grow assets for old age.
Reactions across the financial investment industry are mixed. Supporters view the measures as a way to grow retirement pension reserves, improve returns, and protect workers' rights to receive benefits. However, there is significant concern about the entry of the National Pension Service (NPS). An official at a major securities firm said that fund-type retirement pensions "may create new business opportunities, but competition will become fierce." Industry officials warn that if the NPS enters as an open operator for public institutions, financial institution open and joint operators could face economies-of-scale disadvantages. Opinions differ among labor, management, government, and experts on the method and scope of NPS participation, and one official said National Assembly-level discussion will be necessary.
Securities firms affiliated with bank holding companies are expected to be active in the financial institution open category, where private institutions establish separate trustee corporations. A securities firm, bank, and insurer within the same financial holding group could form a consortium to create a trustee corporation, generating affiliate synergies and expanding retirement pension management assets. Relatively disadvantaged major securities firms are likely to wait and observe market trends during the early stages of the fund-type introduction. Small and mid-sized firms are expected to focus on strengthening their competitiveness as contract-type operators.
The easing of risky asset limits has drawn positive reactions. The industry expects retirement pension flows toward performance-linked products and the securities sector to accelerate. Allowing Investment Management Accounts (IMAs) and issued notes as investment products for Defined Contribution (DC) plans and IRPs is seen as broadening investor choice and expanding demand for these products. Choi Jong-jin, Head of the Pension Innovation Division at Korea Investment & Securities, said that as pension investors increasingly use the capital market, workers can share in capital market growth, and that shifting retirement assets from deposits and savings toward investment markets could help grow assets for old age.
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