Untouched Retirement Funds Yield 2.63%, Widening Gap

If retirement pension subscribers do not actively choose how to invest, the average annual return rate for basic investment products with low principal loss risk (stable default options) stands at 2.63%. Actual choices for default options are mostly concentrated in principal-guaranteed products. Retirement pensions are funded by companies, but actual returns depend on individual investment choices. Especially for Defined Contribution (DC) and Individual Retirement Pension (IRP) accounts, the outcome of retirement preparation can differ completely depending on the chosen products. The impact of low returns is difficult to feel in the short term, but the gap widens as time accumulates. The difference between a 2% annual return and a 5-6% annual return compounds over time, expanding into a wealth gap of tens of millions to hundreds of millions of won in 20-30 years.

For subscribers unfamiliar or uncomfortable with investing, using TDF (Target Date Fund) is suggested as an alternative. TDFs are structured to automatically adjust asset allocation based on the retirement date, pursuing returns by increasing stock weighting initially and securing stability by increasing bond weighting as retirement nears. They are useful for salaried workers who find it difficult to dedicate time to managing their pension, as investors do not need to manage the portfolio separately.

For subscribers seeking more aggressive returns, using ETFs (Exchange Traded Fund) is suggested as an alternative. ETFs are products that track specific indices or themes, offering both diversified investment and liquidity. A common strategy is to lower volatility with large-cap ETFs while combining them with thematic or global ETFs to expect growth and regional diversification.

Retirement pensions have built-in safety mechanisms to prevent excessive losses, with the investment proportion in risky assets limited to a maximum of 70%, while the remaining 30% must be maintained as stable assets.