Securities Industry's Heated Competition for Free IRP Fees

Samsung Securities Sparks the Flame
Mirae Asset and Yuanta Securities Join
Only Management and Asset Management Fees Waived
Not All Fees Are Exempted

Long-term Subscription Products Lasting 20-30 Years
Trustworthiness, Investment Infrastructure Services, and Other Factors Must Also Be Carefully Considered

[Asia Economy Reporter Park Jihwan] The war over free fees for Individual Retirement Pension (IRP) accounts, which started at Samsung Securities, is expanding across the industry with the participation of Mirae Asset Securities and Yuanta Securities.

According to the financial investment industry on the 7th, Yuanta Securities decided to waive all IRP fees unconditionally starting from the 17th. Yuanta Securities had already waived all fees for tax deduction IRP accounts at the beginning of last month and lowered the fees for retirement IRP accounts to the industry's lowest level of 0.1%. However, going forward, both existing and new customers will be able to use IRP account services free of charge.

The spark for free IRP fees was ignited by Samsung Securities. On the 19th of last month, Samsung Securities launched the industry's first IRP product called ‘Direct IRP’ that waives all fees for new customers. Mirae Asset Securities also plans to fully waive the current fees of 0.1~0.3% for both new and existing customers once preparations such as amendments to terms and conditions are completed within this month.

Although these securities firms have declared free IRP fees, not all fees are waived. IRP fees are broadly divided into management and asset management fees charged on the IRP account itself, and commissions charged when subscribing to products such as funds through the IRP account. The fees that securities firms are waiving now are the management and asset management fees, which have been charged annually at a rate of 0.1 to 0.5% by retirement pension providers including banks, securities firms, and insurance companies on IRP accounts. Previously, there was significant dissatisfaction as fees of up to 0.5% were deducted simply for opening a retirement account under the name of management fees, which lowered IRP returns. For example, Samsung Securities explains that a retiree aged 55 who deposits 300 million KRW in retirement funds and earns an annual return of 3% over 20 years can save over 10 million KRW in fees upon receiving the pension. However, sales commissions or management fees incurred when investing in products such as funds or Exchange-Traded Funds (ETFs) must still be borne by the customer.

As the IRP market rapidly grows, competition among IRP providers over fees to capture market share is expected to intensify further. Experts advise that while it is important to consider how much the fees are, given the long-term nature of the product spanning 20 to 30 years, trust in the financial company and the provision of investment infrastructure services are also crucial factors. An industry insider explained, "Although the fee burden is reduced, due to the non-face-to-face nature of the accounts, it is difficult to receive help from asset management experts, so whether there are well-established investment solutions that allow easy access to various investment products will be an important factor in choosing an account."

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