Banks Prepare Retirement Pension ETF Investment Products... Competition with Securities Firms Approaching

Protecting 130 Trillion Won Retirement Pension
Using Trust Type as a Detour Card

[Asia Economy Reporter Kiho Sung] It is reported that commercial banks are preparing to launch products investing in exchange-traded funds (ETFs) for retirement pension subscribers within this year. Until now, bank retirement pension subscribers were unable to invest in ETFs. Due to this, many customers have been moving to securities firms, prompting banks to introduce a workaround by investing through a trust-type product. The industry expects fierce competition between banks and securities firms over attracting retirement pension subscribers to begin.

According to the financial industry on the 2nd, KB Kookmin Bank, Shinhan Bank, Woori Bank, and others are expected to start ETF trading services for retirement pension subscribers within this year. Other banks are also expected to release related products by the first half of next year at the latest.

Until now, banks have been preparing to enable real-time ETF trading from retirement pension accounts in cooperation with securities firms. Although the system was fully established, a regulatory interpretation stated that real-time trading brokerage is an exclusive business area of securities firms, leading banks to seek alternatives.

Accordingly, banks found a solution in the trust method. Under this method, banks enter into a trust contract with retirement pension subscribers, and when subscribers place orders, the bank acts as an agent to trade ETFs. A bank official said, "The trust method makes real-time trading difficult," adding, "We expect to provide ETF services in a delayed trading format."

The reason banks are starting retirement pension ETF trading services is to protect the retirement pension balances. At the end of last year, the total retirement pension balance was 255 trillion won, with banks holding about half, approximately 130 trillion won. Especially after COVID-19, as a large number of young people entered the stock market, there has been increased concern about losing retirement pension customers. Young people prefer direct investments such as ETFs over funds because they can immediately check returns.

However, the trust fees incurred when retirement pension subscribers invest in ETFs are a burden. In the case of securities firms, fees are almost zero when trading ETFs from retirement pension accounts, but banks are expected to charge trust fees.

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