IBK, Establishes Retirement Pension ETF Trading System... Service Available in First Half (Comprehensive)

Expectations for Securing Competitiveness through Improved Pension Returns and Enhanced Product Offering Capabilities

IBK Industrial Bank of Korea Retirement Pension Reserves and Yield Rates (Financial Supervisory Service) (Unit: 100 million KRW, %)

[Asia Economy Reporter Park Sun-mi] IBK Industrial Bank of Korea will enable trading of retirement pension exchange-traded funds (ETFs) within the first half of the year. There is great expectation that the retirement pension returns, which are currently lower than those of commercial banks, will improve.

According to the financial sector on the 11th, IBK is working on building a system with the goal of launching retirement pension ETF trading services within the first half of this year. The bank plans to add ETF products to retirement pension assets to build a diverse portfolio and allow customers to directly instruct ETF product management through the bank’s application (app) i-ONE Bank’s non-face-to-face service. They expect to enhance pension returns through direct ETF investment by retirement pension subscribers and secure business competitiveness by strengthening product offering capabilities.

Among commercial banks, Hana, Shinhan, and Woori Bank have already launched retirement pension ETFs, while KB Kookmin and NH Nonghyup Bank are developing systems and plan to start services within the first half of the year. In an environment where customer interest in direct investment in retirement pensions has increased due to the stock market boom following the spread of COVID-19, banks are rushing to enter the retirement pension ETF market.

According to the Financial Supervisory Service, the current retirement pension market size is about 260 trillion KRW. As of the end of the third quarter this year, IBK’s defined benefit (DB) and defined contribution (DC) retirement pension reserves are 9.1202 trillion KRW and 8.4621 trillion KRW, respectively.

Both are the third largest compared to commercial banks, reflecting the strength of holding the highest market share (22.9%) in the small and medium-sized enterprise loan market. However, the individual-type IRP reserves, which are contributed by individuals, amount to 1.4755 trillion KRW, the lowest among commercial banks.

While the low proportion of individual customers is a factor, IBK’s retirement pension operation returns over the past year for DB, DC, and individual IRP are all at the lowest level in the banking sector, ranging from 1.03% to 2.03%. From IBK’s perspective, expanding the retirement pension product lineup and improving returns are urgent to prevent customers from moving to other banks and securities firms. Since last month, IBK has waived all fees for customers who joined individual IRPs through non-face-to-face channels.

A representative from a commercial bank explained, "Even though the DC-type retirement pension contributions are made by businesses, individuals can manage the investments, so expanding the retirement pension product lineup has become important. Retirement pension ETF products in the banking sector are trust-based and do not allow real-time trading, but banks are rushing to build trading systems to broaden options."

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