Retirement Pension Reserves Surpass 500 Trillion Won for the First Time... Return Rate at 6.5%

Financial Supervisory Service Releases “2025 Korea Retirement Pension Investment White Paper”

Money Moves Accelerate to DC, IRP, and ETFs... ETF Investment Rapidly Emerging

Despite Record-High Returns, Some Say “Still Lags Behind the Stock Market”

The total amount of domestic retirement pension reserves has surpassed 500 trillion won for the first time ever. It reached this milestone just one year after exceeding 400 trillion won. Last year's annual return also set a record high at 6.5%. However, some point out this figure is disappointing when considering the KOSPI rally and other favorable market conditions.

According to the “2025 Korea Retirement Pension Investment White Paper” released by the Ministry of Employment and Labor and the Financial Supervisory Service on May 20, as of the end of last year, retirement pension reserves increased by 69.7 trillion won from the previous year, reaching 501.4 trillion won. This is the first time the reserve has exceeded 500 trillion won since the introduction of the system. A government official commented, "It is an ultra-fast growth trajectory, achieving 500 trillion won just a year after breaking the 400 trillion won mark," adding, "The money move to defined contribution (DC) plans, individual retirement pensions (IRP), and exchange-traded funds (ETF) is accelerating."

By system type, defined benefit (DB) plans accounted for 228.9 trillion won, representing 45.7% of the total, though this proportion has declined compared to last year. DC plans and corporate IRPs amounted to 141.6 trillion won (28.2%), and individual IRPs stood at 130.9 trillion won (26.1%). Among these, IRPs are showing rapid growth with an annual increase of around 30%. By investment method, the proportion of performance-based investments (24.6%) has doubled over the past three years, indicating that asset allocation investments are becoming more active, especially in DC and IRP products.

ETF investment is also rapidly emerging. The amount invested in ETFs via retirement pension accounts reached 48.7 trillion won, recording a triple-digit growth rate for three consecutive years. In 2023, ETF balances in retirement pension accounts were only around 9 trillion won. Thanks to the domestic stock market boom, investments in KOSPI index-tracking ETFs (passive funds) also jumped 317.6% year-on-year.

In addition, among public funds, target date funds (TDFs)—which automatically adjust asset allocation based on the expected retirement date—accounted for the majority of top investments. The amount invested in TDFs via retirement pension accounts reached 20.1 trillion won, a 50% increase over the previous year. A government official explained, "78.5% of the total TDF net assets (25.6 trillion won) are invested through retirement pensions, solidifying its status as a key retirement planning tool," and added, "It delivered a high return of 13.7% last year."

By business sector, banks accounted for 260.5 trillion won (52.0% market share), securities firms 131.5 trillion won (26.2%), insurance companies 104.6 trillion won (20.9%), and the Korea Workers’ Compensation and Welfare Service 4.5 trillion won (0.9%). The market share of securities firms has steadily increased from 22.7% in 2023 to 24.1% in 2024 and 26.2% in 2025, while the share of banks and insurance companies is on a decline. Securities firms also managed 59.4 trillion won in performance-based investment assets, accounting for nearly half of all reserves.

Last year's annual return was 6.47%, the highest since the system was introduced in 2005. However, compared to the National Pension Service (19.9%) and global pension funds that posted high returns thanks to the bull market last year, it is still considered lacking. A government official pointed out, "While proactive asset management by the top 10% group has pulled up the overall average, half of the participants still remain at a low return rate in the 2% range, barely keeping up with inflation."

By investment method, the performance-based return reached 16.8%, which is five times higher than the principal-guaranteed type (3.09%). By system type, DB plans posted 3.53%, DC plans 8.47%, and IRP plans 9.44%, showing that systems with a higher proportion of performance-based investments delivered relatively higher returns. In 2025, the top 10% in terms of returns invested 84% of their total reserves in performance-based products (combined DC and IRP). In contrast, the bottom 10% managed 74% of their reserves in principal-guaranteed products. Most of the increase in reserves (77%) came from principal contributions, with investment returns accounting for only 23%.

A government official stated, "According to a survey on retirement pension awareness among employees, while there is interest in managing reserves, 57.1% said they do not know how to do so." He added, "We will produce and distribute a ‘Retirement Pension Guidebook’ in the second half of this year that is easy for everyone to understand, and provide guidance on pension savings, another core tool for retirement planning alongside retirement pensions, in June."

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