Annual Surge in Withdrawals from the Military Mutual Aid Association

Retirement Benefit Fund Decreases by 109 Billion Won This Year
Interest Rate on Savings Products Raised to Prevent Member Withdrawals

The number of members withdrawing from the Military Mutual Aid Association is increasing every year, leading to a decrease in the retirement benefit fund.

According to the Military Mutual Aid Association on the 31st, the retirement benefits entrusted by professional soldiers and military officials decreased by 109 billion KRW, from 6.0377 trillion KRW as of December last year to 5.9287 trillion KRW at the end of June this year.

The sharp decline in the retirement benefit fund appears to be due to the increasing number of members who have been contributing large sums of money for decades withdrawing from the Military Mutual Aid Association each year.

The number of withdrawals was 18,887 in 2019, 19,977 in 2020, and exceeded 20,000 to reach 21,127 in 2021. Last year, 22,968 members withdrew, and as of the end of August this year, 15,836 members have reclaimed their retirement benefits.

On the other hand, with the number of soldiers decreasing every year, the number of new members is slightly increasing. In 2019, 169,749 people joined, followed by 172,826 in 2020, 174,287 in 2021, 174,506 in 2022, and approximately 178,150 as of the end of June 2023.

The Military Mutual Aid Association cited living expenses, home purchases, and loan repayments as reasons for the increase in withdrawals. In particular, due to the impact of interest rate hikes, commercial banks are offering higher interest rates, leading to more members switching their retirement funds. With the recent rise in U.S. Treasury yields, competition among banks for funding, and pressure to curb household loans, the number of withdrawing members is expected to increase further.

To prevent members from withdrawing, the Military Mutual Aid Association decided to raise the interest rates on all member savings products on this day. Additionally, they plan to increase the maximum subscription accounts for member retirement benefits and introduce a pension-type lump-sum savings product starting next year. The interest rate on member retirement benefits will also be raised from the existing 4.70% to 4.90%, an increase of 0.20 percentage points. The increased interest rate will be applied from the association’s 40th anniversary on February 1 next year, following approval by the delegates' meeting. A military official stated, “For those who purchased homes after retirement, the burden of loan repayments is increasing due to the rise in interest rates.”

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