Since the start of receiving retirement pensions, the importance of management strategies is growing..
The top 5% of retirees who began to receive pensions actively operated 6.9% of the three-year average published return rate is 34.5%, and to revive the purpose of the 87% pension lump sum receipt installment pension last year, the government should hurry to raise the pension yield by improving default options and funding them
Since the start of receiving retirement pensions, the importance of management strategies is growing in that the period of pension depletion can vary by more than 10 years depending on how retirement pension assets are managed. Smart retirement pension investors are investing heavily in bonds and exchange-traded funds (ETFs) that invest in the U.S. market, the report showed. It is analyzed as a result of reflecting the demand to pursue growth together while creating stable cash flow.
Among those in their 50s who are about to withdraw, unlike before, a high proportion of people prefer to receive pensions rather than lump-sum payments. In particular, it is pointed out that there is an urgent need to improve the return on retirement pensions, such as improving default options, as investors with higher returns tend to prefer receiving them in a pension manner rather than a lump sum.
According to Mirae Asset Securities on the 24th, individual pensioners mainly invest in corporate bonds and index-following ETFs such as S&P 500 and Nasdaq.
As of the end of last month, the most subscribed product for individual pensioners was TIGER 25-10 corporate bonds (A+) active. It was followed by “TIGER US Nasdaq 100”, “Mirae Asset Strategy Allocation TDF2025 Mixed Asset CP”, “TIGER US S&P500”, and “TIGER US Tech TOP10 INDXX”. Looking at the yield, TIGER 25-10 Corporate Bond (A+ and above) Active has a one-year yield of 3.65%.
TIGER US Nasdaq 100 has outperformed the market over the past year by 22.42% over the past year, by 96.94% over the past three years, by 156.94% over the past five years, and by 519.33% over the past 10 years. TIGER U.S. Tech TOP10 INDXX posted a one-year return of 27.84% and a three-year return of 138.39%. The TIGER U.S. S&P 500 has a one-year and three-year yield of 17.47% and 71.44%, respectively.
Individual retirement pension (IRP) recipients also chose “TIGER 25-10 corporate bonds (A+) active” the most. It was followed by ‘(new) post office regular deposit DB/DC/IRP 1Y_retirement’, ‘TIGER US S&P500’, ‘Korea Securities Financial Deposit DC/IRP 3Y_retirement’, and ‘TIGER US Nasdaq 100’.
However, in the case of deposit products, the rate of return was only around 2%, which was lower than that of bond-type products.
According to Mirae Asset Securities, the three-year average declared return rate of 6.82 percent for the group that started receiving pensions. In the case of the top 5% subscribers, the average was 34.49% during the same period, widening the performance gap depending on the management strategy. Increasing the rate of return through strategic operations can take longer periods of receipt even at the time of pension withdrawal.
While the number of pensioners is expected to increase to 2.6 million within the next five years, the proportion of people who want to receive them in the form of pensions rather than lump-sum payments is also increasing.
According to a survey of 1,000 office workers in their 50s conducted by Mirae Asset Securities, 58.3% of the respondents said they would like to receive all or part of their severance pay as a pension. This is about 45 percentage points higher than the current pension selection rate announced by the Ministry of Employment and Labor. Among the accounts that began receiving retirement pensions last year, only 87% chose to receive a lump sum, and only 13% chose the form of pension.
In particular, the intention to receive pensions differed according to the expected size of retirement pension assets. Among the respondents with more than 200 million won in pension assets, 73% wanted to withdraw their pension. On the other hand, only 48% of respondents with pension assets of 20 million won or less hoped to withdraw their pensions.
For this reason, it is pointed out that it is essential to raise the rate of return on retirement pensions in order to expand the rate of pension receipt.
Funding methods are discussed to improve returns, but there is a problem that it is difficult to introduce within a short period of time. This is why there are voices calling for urgent efforts to actively utilize the existing system to induce pension receipt and to increase the size of receipt, centering on baby boomers entering a full-fledged withdrawal period.
In particular, the key is to improve the pre-designated operation system (default option). It is not working as well as expected in Korea. According to the Ministry of Employment and Labor, 82.6% of retirement pension reserves were concentrated on principal and interest guaranteed products as of the end of last year. In the same year, the average return on the dividend type was 9.96%, while the principal and interest guarantee type was only 3.67%.
Nam Jae-woo, a researcher at the Korea Capital Market Institute, said, “The current default option system is virtually not working properly,” adding, “It is a structure that requires people who cannot make a choice again, and it does not make use of the purpose of introduction because it includes principal and interest guaranteed products.”
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