Pension funds go undistributedData showed yesterday that more than 40 percent of Korea’s pension savings accounts haven’t started being distributed to account holders even though they have reached maturity. According to the Financial Supervisory Service, as of the end of April, a total of 330,000 pension savings accounts had reached maturity, but distribution had not begun for 44.8 percent of them.
In Korea, individuals subscribe to personal pensions through banks, insurance companies and brokerage firms by paying a certain amount each month into an account to help fund their later years and to receive year-end tax benefits. Based on financial policy, those who began setting aside monthly pensions before 2000 had to pay for 10 years and are to receive pensions after they turn 55 years old; those who joined after 2001 are required to pay for five years or more to start receiving back their savings from the same age.
“We started looking into the matter of the overall conditions of pension distribution when we discovered early this year that there were many pension savings accounts that were not being distributed to subscribers even though they had reached maturity,” said Moon Jae-ik, a director general at the financial regulator.
The FSS said a total of 142,000 accounts of individuals who started paying prior to 2000 haven’t been distributed. For individuals subscribed to personal pensions under the new policy, 5,543 accounts haven’t been delivered.
Most undistributed pensions were from banks, followed by insurance companies and brokerage firms.
“Based on our study, the reason why so many pension payments have not started their distribution is because financial institutions like banks, insurance companies and securities firms lack personal data of pension holders and therefore are not able to contact them,” Moon said.
He explained that because pension savings are a long-term investment, financial institutions often have difficulty locating customers to inform them they should start receiving monthly pensions.
The FSS, meanwhile, laid out measures to improve the overall system so that subscribers to personal pensions are well-informed.
“We will advise financial institutions to inform customers when they visit banks or log in online for other services like loans and installment savings,” Moon said.
By lee eun-joo [email@example.com]