"Prize Giveaway"... IRP Customer Acquisition Battle Heats Up in Financial Sector

Poster for the '2021 Pension Flower Road Individual IRP Event' conducted by KB Kookmin Bank [Photo by KB Kookmin Bank]

[Asia Economy Reporter Song Seung-seop] Financial companies are consecutively launching promotions related to Individual Retirement Pensions (IRP). As the low-interest rate trend continues and market volatility due to COVID-19 increases, attention is focused on IRPs, which offer stable tax deduction benefits, leading to competition for customer acquisition.

According to the financial industry on the 10th, recently KB Kookmin Bank and KB Securities announced that they will hold the '2021 Pension Flower Road' event for existing and new IRP customers.

The promotion targets customers who newly subscribe with at least 100,000 KRW and register automatic transfers of at least 100,000 KRW for over a year, or those who newly subscribe with at least 1,000,000 KRW. It also applies to customers who transfer 1,000,000 KRW or more from pension savings or IRP accounts at other financial institutions to KB Kookmin Bank IRP, or convert and deposit maturity funds from Individual Savings Accounts (ISA) to KB Kookmin Bank IRP with 1,000,000 KRW or more. Meeting just one of these four criteria entitles customers to receive mobile coupons without a lottery.

Existing customers who switch or add funds to fund products from participating management companies will receive Starbucks or BBQ mobile coupons depending on the amount. Separately, among customers participating in the event, 93 people will be selected by lottery to receive prizes such as LG Styler, Dyson cordless vacuum cleaner, DeLonghi coffee machine, and Apple AirPods Pro.

Woori Bank's 'IRP Wind Blows' Event Poster Running Until the End of June [Photo by Woori Bank]

Woori Bank also announced that it will hold the ‘IRP Wind Blows’ event for customers who newly deposit or add funds to IRP or deposit ISA maturity funds.

Until the end of June, customers who newly subscribe to personal IRP with at least 100,000 KRW and register automatic transfers, make additional deposits of 1,000,000 KRW or more, or deposit ISA maturity funds (including from other institutions) into their IRP will be entered into a lottery for prizes. The prizes include Dyson air purifiers (5 people), Samsung Cube air purifiers (20 people), Baskin Robbins 5,000 KRW mobile vouchers (500 people), and more.

Hana Bank conducted the ‘Personal IRP Start Up’ event until the end of last month, providing prizes to 3,500 customers who subscribed to personal IRP over about 15 days.

As demand for IRP steadily increases, the industry is planning various events to attract customers. According to the ‘2020 Year-End Retirement Pension Fund Operation Status Statistics’ announced by the Financial Supervisory Service and the Ministry of Employment and Labor, IRP funds reached 34.4 trillion KRW last year, expanding by 9 trillion KRW (35.5%) compared to the previous year. It is analyzed that the characteristic of IRP, which individuals can manage directly, has been a popular factor amid the low-interest rate trend and stock market boom.

Moreover, the fact that stable tax deductions can be received annually, practically like earnings, is also recognized as an advantage. Funds accumulated in IRP accounts are eligible for tax deductions up to 7 million KRW during year-end tax settlement. For the 2020 tax year, IRP amounts accumulated by subscribers aged 50 or older increased the existing tax deduction limit (7 million KRW) by 2 million KRW, raising the maximum tax deduction to 9 million KRW.

A KB Kookmin Bank official said, “As market volatility increases, interest in managing pension returns is growing,” adding, “We have prepared an event where customers can receive smart asset management including tax deductions, retirement preparation, and return management.” A Woori Bank official also said, “(IRP) offers tax deductions up to 7 million KRW annually, so we hope the event helps with retirement fund management and tax-saving benefits.”

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