Na Jae-cheol, Chairman of the Korea Financial Investment Association, "Even a Default Option Including Deposits Must Be Passed"

Nae Jae-cheol, Chairman of the Korea Financial Investment Association, is listening to the remarks of Eun Sung-soo, Chairman of the Financial Services Commission, at the meeting between the Financial Services Commission Chairman and CEOs of the financial investment industry held on the 5th at the Korea Financial Investment Association in Yeongdeungpo-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Junho Hwang] Na Jae-cheol, chairman of the Korea Financial Investment Association, has changed his stance on the default option (pre-designated operation system) for retirement pensions. Although he previously argued that including principal-guaranteed products such as deposits in the default option to improve retirement pension returns was unreasonable, he officially stated, "Please quickly pass the bill that includes principal-guaranteed products in the types of pre-designated operation products within the scope that does not undermine the original purpose of improving returns."

Chairman Na made these remarks at the Financial Investment Association's second half press briefing held at 10:40 a.m. on the 15th. He said, "I earnestly request the National Assembly from a magnanimous perspective." He began by saying, "Since early this year, the National Assembly has been discussing the introduction of the pre-designated operation system to improve the low returns of retirement pensions." However, he added, "During the discussions, opinions have been divided over whether to include principal-guaranteed products in the types of pre-designated operation products, and the bill has yet to pass the National Assembly," and explained the reason for his change of stance by saying, "The association judged that improving the retirement pension system, which has almost lost its function as a source of old-age income security, is an urgent task that can no longer be postponed."

The default option is a system where if subscribers do not specify how their funds should be managed in certain assets, it is assumed they agree to automatically invest in funds with good returns. However, opposition parties and the insurance industry maintain that it is risky for the public’s retirement funds to be automatically invested in stocks and funds that do not guarantee principal, and insist on including bank or insurance products. The Korea Financial Investment Association’s position was that including such products in the default option, which is intended to improve the low returns of retirement pensions, would undermine the original purpose of enhancing returns. However, the bill containing the default option, which was submitted to the National Assembly in January, saw its decision delayed at the Environment and Labor Committee’s bill review subcommittee on the 29th of last month, and it appears that the association has changed its stance to facilitate the bill’s passage.

Chairman Na said, "If the pre-designated operation system is introduced, retirement pensions will be completely transformed into a system for subscribers," and added, "The market structure, which only attracts retirement pensions but neglects after-service for subscribers, will change to a structure that competes with customized services and excellent products." He further expressed hope, saying, "Retirement pension providers that fall behind in return competition will be shunned by subscribers, and the time will come when subscribers truly become the owners of the retirement pension system."

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