KOFIA "Will Communicate with the 21st National Assembly... Support for Introducing Advanced Retirement Pensions"

Announcement of "Wishes for the 21st National Assembly" on the 3rd

Nae Jae-cheol, Chairman of the Korea Financial Investment Association (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Bo-ryeong] The Korea Financial Investment Association (KOFIA) emphasized active communication with the 21st National Assembly to promote the development of the financial investment industry.

On the 3rd, KOFIA expressed hope that bills which had reached bipartisan agreement in the 20th National Assembly but failed to pass the plenary session and were discarded would definitely be passed in the 21st National Assembly through its statement titled "Hopes for the 21st National Assembly."

Na Jae-cheol, Chairman of KOFIA, said, "We will actively communicate with the 21st National Assembly to contribute to the development of the financial investment industry, which is a part of the national economy, and continue efforts to create a 'sound investment environment and mature investment culture.'"

First, KOFIA requested support from the National Assembly and government for the introduction of an "advanced retirement pension system" to ensure stable retirement income for the public. While the fund-type and default option systems in the U.S. and Australia, which are the most successful, have long-term returns averaging 7% annually over more than 20 years, domestic retirement pensions fall short even of inflation rates. The 5-year annualized return is about 1.76%, and the 10-year annualized return is about 2.81%.

Chairman Na explained, "Advanced retirement pensions, adopted by most developed countries globally, can reduce corporate burdens (DB type) and secure direct retirement assets for subscribers (DC type) by improving returns. For example, establishing a separate fund solely for 'retirement pension management' in the form of a national pension-type fund that allocates and manages assets according to fund operation principles, and simultaneously promoting the introduction of a default option system that directly invests in portfolios meeting strict criteria set by the Ministry of Employment and Labor for workers lacking financial knowledge."

KOFIA's position is that support from the 21st National Assembly and tax authorities is necessary for investor-friendly and rational tax reform. As the scope of capital gains tax on stock transfers continues to expand, issues of double taxation with transaction tax and capital gains tax have arisen. Loss offsetting and loss carryforward are not permitted among financial investment products such as stocks and derivatives where losses may occur, and in cases like funds and derivative-linked securities, taxation as dividend income can result in high tax rates. Chairman Na emphasized, "By gradually reducing and eventually abolishing securities transaction tax and taxing only capital gains tax, the problem of double taxation can be resolved. It is also necessary to expand loss offsetting across all financial investment products and introduce loss carryforward, including allowing loss offsetting for funds where losses are currently not recognized."

KOFIA plans to restore trust in private equity funds and create a momentum for their resurgence so that private equity funds can fulfill their original roles. This stance is based on the view that recent misconduct by some management firms should not be seen as a problem of the entire private equity fund industry, but rather that support for the healthy development of the professional private equity investment industry is necessary. Chairman Na stated, "We will actively cooperate to ensure the smooth implementation of private equity fund measures already announced by policy and supervisory authorities," and added, "We also plan to actively support the passage of the Capital Markets Act amendment related to the 'unification of private equity funds,' which failed to pass in the previous National Assembly, in the next National Assembly."

This content was produced with the assistance of AI translation services.