Hanhwa Investment & Securities Surpasses 9 Trillion KRW in Retirement Pension Reserves... Customized ALM Shows Strong Effectiveness

[Asia Economy Reporter Ji Yeon-jin] Korea Investment & Securities has recently been rapidly increasing the scale of its retirement pension funds.

According to the Financial Supervisory Service's Integrated Pension Portal on the 2nd, Korea Investment & Securities' retirement pension reserves reached 7 trillion KRW in January 2021, and increased by 1.7 trillion KRW in just over a year, now exceeding 9 trillion KRW.

In the '2021 Retirement Pension Operator Performance and Capability Evaluation' announced by the Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service, Korea Investment & Securities was the only securities company selected as a top 10% retirement pension operator in the overall comprehensive evaluation. Hong Deok-gyu, head of the Retirement Pension Division at Korea Investment & Securities, explained, "This is the result of a combination of Korea Investment & Securities' unique retirement pension system convenience, fee benefits, and diverse product lineup."

Korea Investment & Securities provides professional pension asset management consulting services based on its experience as a large-scale pension OCIO (Outsourced Chief Investment Officer). In particular, it has enhanced profitability and stability, which are core to pension asset management, through a customized Asset-Liability Management (ALM) solution. ALM is an investment technique that integrates the management of volatility between liabilities and assets by reflecting the characteristics of retirement liabilities, which are sensitive to interest rate fluctuations, in retirement pension asset management.

They are also responding swiftly to changes in retirement pension regulations. According to the amendment of the Employee Retirement Benefit Security Act (ERBSA), from April this year, companies with more than 300 regular employees are required to establish a reserve fund management committee. Additionally, they must prepare a reserve fund management plan (IPS) that includes the purpose, methods, and target rate of return for managing the reserves, and manage the reserves based on this plan. Accordingly, Korea Investment & Securities provides customized consulting to prepare IPS for each company.

By offering various services and proactive asset allocation consulting, they have also improved the returns of DC-type and Individual Retirement Pension (IRP) plans. As of the end of 2021, Korea Investment & Securities' DC-type and IRP one-year returns were 4.72% and 4.95%, respectively, ranking among the top in the industry.

To enhance returns, since March 2020, they have established a comprehensive management instruction system for principal-guaranteed product groups (ELB), where at maturity, customers' funds are reinvested at the optimal interest rate within the same product group without requiring separate operational instructions from the customer. They also provide the 'Magic Solution' service, where experts propose portfolios tailored to customers' investment preferences and offer one-stop services including trading and performance analysis. For customer convenience, they conduct remote support services where consultations are held while viewing the customer's monitor together.

The lineup of investable products is also diverse. Korea Investment & Securities offers 410 Exchange-Traded Funds (ETFs) and listed REITs available for trading in IRP accounts, the largest number within the industry. In June last year, they opened a dedicated bond trading service for retirement pensions, allowing over-the-counter bond trading for DB subscribers, which is expected to contribute to improving the returns of DB-type retirement pensions that had been mainly fixed in principal-guaranteed products. They provide a dedicated pension mobile app and plan to release a renewed app in the first half of the year to enhance user convenience.

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