Corporate pension funds grow 15% in 2017The amount of corporate retirement pension funds managed by Korea’s financial institutions gained 14.6 percent in 2017 from a year ago, but their annual rate of return was below 2 percent, data showed Thursday.
The accumulated corporate retirement pension funds stood at 168.4 trillion won ($158 billion) as of the end of December last year, up 21.4 trillion won from a year earlier, according to the data from the Financial Supervisory Service.
Retirement pension plans that guarantee principal and interest accounted for slightly over 88 percent of the total, while the remainder are schemes that pay returns from investment.
Commercial banks managed 50 percent of the total amount, followed by life insurance companies with 23.5 percent, financial investment companies with 19.1 percent and nonlife insurers with 6.4 percent.
The annualized return rate of the retirement pension funds averaged 1.88 percent last year, up 0.3 percentage point from the previous year. It was lower than the return rate of 2.39 percent for the past five years.
Introduced in 2005, the retirement pension scheme is meant to help fund retirees’ severance payments. Companies and employees make contributions to the pension funds, and employees can receive the pension after their retirement.
The government has been encouraging companies to adopt the retirement annuity program as part of efforts to help reduce the financial burden of severance payments.
More in Economy
Average selling price of Seoul apartments hits 1 billion won
New legislation on online shopping proposed by FTC
Cash is truly king in time of coronavirus
When settling for a studio apartment is too expensive
Bill creates new rental protections for small businesses