Revolutionizing Retirement Funds Management

The Democratic Party of Korea is spearheading a groundbreaking initiative to allow the National Pension Service (NPS) to directly oversee the management of a colossal 400 trillion won in retirement pension funds. This ambitious plan aims to elevate the annual return rate from a modest 2% to an impressive 6%, aligning it with the NPS's performance standards.

A Unified Approach to Pension Management

By consolidating scattered retirement pensions into a single fund, the proposal seeks to leverage the expertise of professional asset managers, including the NPS. This consolidation could potentially expand the NPS's current 1,050 trillion won fund to a staggering 1,500 trillion won, marking a significant leap towards creating a super-large fund.

Enhancing Returns and Stability

The move comes in response to the retirement pension's underwhelming average annual return of 2% over the past decade, a figure that pales in comparison to the NPS's 6% and fails to keep pace with inflation. With the majority of retirement pension funds tied up in low-yield, principal-guaranteed products, the push for a fund-type system promises better investment opportunities and diversification to improve returns.

Looking Ahead: A New Pension Model

The NPS is not only focusing on immediate returns but also on the long-term structural reform of Korea's old-age income security system. By distinguishing the roles of the National Pension, Retirement Pension, and Basic Pension, the NPS aims to propose a sustainable pension model tailored to Korea's unique socio-economic landscape.