[2020 National Audit] Bank Retirement Pension Yields in the 1% Range Worse Than Savings Interest Rates... "Improvement Needed"

Assemblyman Jeon Jae-su: "Banks Are Not Making Significant Efforts to Improve Retirement Pension Returns"

[Asia Economy Reporter Park Sun-mi] It has been revealed that the average return on retirement pensions at commercial banks is only in the 1% range. Considering the fees, the returns are even lower than those of savings deposits, prompting calls for banks to make efforts to improve the situation.

According to the annual return data on retirement pensions submitted by the Financial Supervisory Service to Jeon Jae-su, a member of the Political Affairs Committee from the Democratic Party of Korea, as of the first half of this year, the average return on retirement pensions at commercial banks is only in the 1% range. The defined benefit (DB) type showed 1.68%, the defined contribution (DC) type 1.69%, and the individual retirement pension (IRP) type 1.16%. This reveals that the original purpose of the retirement pension system, which was introduced to secure stable retirement funds, is effectively being undermined.

As of the first half of this year, the DB type returns were 1.79% at Shinhan Bank, 1.71% at Hana Bank, 1.64% at Kookmin Bank, and 1.58% at Woori Bank. For the DC type, Shinhan Bank recorded the highest return at 1.91%, followed by Hana Bank at 1.71%, Woori Bank at 1.61%, and Kookmin Bank at 1.52%. For the IRP type, Shinhan Bank yielded 1.33%, Hana Bank 1.3%, Woori Bank 1.05%, and Kookmin Bank 0.95%.

After deducting the average fee of 0.48% charged by financial companies, the actual returns customers receive are effectively lower than those of bank savings deposits.

On the other hand, fee income for commercial banks has been on the rise, increasing from 260.2 billion won in 2017 to 312.9 billion won in 2018, and 356.6 billion won in 2019. In the first half of this year alone, fee income reached 155.6 billion won. By bank, Shinhan Bank earned the highest fee income at approximately 46.9 billion won, followed by Kookmin Bank with 41.8 billion won, Hana Bank with 33.6 billion won, and Woori Bank with 33.3 billion won.

Assemblyman Jeon Jae-su pointed out, “Retirement pensions are one of the representative means of replacing income for office workers in retirement, but due to the extremely low returns, 98% of retirees are receiving their retirement funds as lump sums.” He added, “Banks, which are earning stable profits from fees and accumulated funds, are not making significant efforts to improve returns. For retirement pensions to fulfill their role as ‘pensions,’ institutional improvements such as fee reductions and the introduction of default options to enhance returns are essential.”

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