The total reserve for retirement pension last year was 295 trillion won, up 15.7% from 2020. Within one year, the amount of reserves increased by 40 trillion won.
According to ‘Statistics on the Management of Retirement Pension Reserves for 2021’ announced by the Ministry of Employment and Labor on the 17th, as of the end of last year, the size of the retirement pension reserves stood at 295 trillion won, up 40.1 trillion won from 255.5 trillion won at the end of 2020. By retirement pension type, defined benefit (DB) plans accounted for 58% of the total at 171.5 trillion won. It was followed by defined contribution (DC) with 77.6 trillion won (26.2%) and personal retirement pension (IRP) with 46.5 trillion won (15.7%). Compared to 2020, the DB type increased by 17.6 trillion won (11.4%) while the DC type increased by 10.4 trillion won (15.4%), a faster growth rate. In particular, IRP increased by KRW 12,000, showing a high rate of increase of 35.1%.
By product type (principal and interest guarantee, performance dividend), 255.4 trillion won (86.4%, including standby funds) and 40.2 trillion won (13.6%) of the total reserves of 295.6 trillion won were in the principal and interest guaranteed type. In the case of DC type (20.7%) and IRP (34.3%), the proportion of performance dividend-type operation was relatively high.
The problem is the low yield. The annual rate of return for retirement pensions was 2%, down 0.58 percentage points from 2.58% in 2020. The annualized rate of return for the past five years is only 1.96%. The Ministry of Labor said, “The annual return is falling due to the continued ultra-low interest rates and stagnant stock prices.” The difference in yields by product was also clear, with the principal and interest guaranteed type recording 1.35% and the performance dividend type recording 6.42%. By type of system, DB type 1.52%, DC type/IRP special case 2.49%, and IRP 3% were recorded.
After the retirement of the baby boomer generation, the rate of receiving retirement pensions is also increasing. Last year, the number of accounts that started receiving retirement pensions was 397,270. Among them, the proportion of pension recipients was 4.3%, an increase of 1 percentage point from the previous year (3.3%). Based on the amount, 34.3% of the total 9.3 trillion won was paid as annuity, and the average amount received in the pension receiving account was 188.58 million won.
