The size of the accumulation for the pension savings insurance, a pension savings product operated by insurers, fell below 72 trillion won in the third quarter of this year. As the revenue has been below 3%, more customers are now choosing pension savings funds, which allow indirect investment in major stock markets such as the United States, instead of pension savings insurance.
Pension savings are financial products that allow individuals to receive pensions after making contributions for over five years and reaching the age of 55. A contribution of 6 million won per year can maximize tax credit benefits during year-end tax adjustments. Products operated by insurers include pension savings insurance, while those operated by securities firms include pension savings funds. Although banks used to provide pension savings trusts, sales have currently been halted.
According to the Financial Supervisory Service, the combined pension savings insurance accumulation of 27 life and non-life insurance companies was 71.9191 trillion won in the third quarter of this year, a decrease of 167.4 billion won from the same period last year (72.0793 trillion won). Compared to the end of last year, it has dropped by 314 billion won. The accumulation of pension savings by insurers steadily increased to 70 trillion won in 2021, 71 trillion won in 2022, and 72 trillion won in 2023. However, growth has slowed since this year, leading to a drop to 71 trillion won in the third quarter.
In contrast, the accumulation for pension savings funds operated by securities firms reached 17.4954 trillion won in the third quarter of this year, an increase of 761.8 billion won within this year alone. Even in the third quarter of last year, all of the top seven accumulations were held by insurance companies. However, Mirae Asset Global Investments, who ranked eighth, has risen to fifth in the third quarter of this year, and Samsung Asset Management, which was outside the ranking, now ranks tenth. KB Insurance and DB Insurance have seen their accumulation decrease, resulting in a drop of one rank each.
This phenomenon can be interpreted as an increase in individuals who have signed up for pension savings insurance but are now transferring to pension savings funds, as well as new customers, including young employees in their 20s and 30s, choosing pension savings funds. Even if one has already subscribed to pension savings insurance, it is possible to transfer to pension savings funds while maintaining tax benefits.
Such a trend appears to stem from differences in revenue. In the third quarter of this year, the simple average revenue of pension savings insurance from insurers was 2.64%, showing a significant gap compared to pension savings funds (10.12%). Last year, while pension savings funds recorded revenues over 12%, pension savings insurance remained at 2.6%. Considering the inflation rate, it can be said that the actual revenue is minimal.
Pension savings insurance accumulates revenue according to the variable interest rate of the disclosed rate. When individuals deposit money with an insurer, the insurer pays interest equivalent to the disclosed rate. The disclosed rate fluctuates with market interest rates, so if the market interest rate falls, the disclosed rate also decreases. In cases like recent interest rate cuts, the revenue will decline even further. However, the biggest advantage is the guarantee of the principal.
Pension savings funds allow subscribers to directly invest in funds to generate revenue. Notably, it is advantageous because it allows for indirect investment in the U.S. market through exchange-traded funds (ETFs) listed domestically. The Standard & Poor’s 500 index has risen approximately 23% this year, contributing to the performance of pension savings funds. However, if the stock market performs poorly, there is a risk of losing the principal.
An official in the insurance industry noted, 'The revenue of pension savings funds can fluctuate, sometimes being higher than the revenue of other products,' adding that 'it should be monitored from a long-term perspective.'