The Financial Services Commission noted on the 27th that Pount Investment Advisory (an investment management company) and Hana Bank (a retirement pension service provider) will launch retirement pension robo-advisor discretionary management services for the first time.
Retirement pension robo-advisor discretionary management services are designed to automatically generate customized portfolios for investors using validated algorithms and provide instructions for managing individual retirement pension (IRP) contributions. Until now, IRP participants had to give direct management instructions for their contributions. The retirement pension robo-advisor discretionary management service is structured so that the robo-advisor of the investment management company provides management instructions on behalf of the participants.
Earlier, the Financial Services Commission designated the retirement pension robo-advisor discretionary management service as an innovative financial service in December last year to enhance the low revenue of retirement pensions concentrated in principal-protected products, based on applications from 17 investment management companies. After a preparation period, they are now entering into the full-scale service starting today. The remaining providers are also expected to begin services in turn.
The Financial Services Commission stated that anyone with income can sign up for the retirement pension robo-advisor discretionary management service. Enrollment can be done through the IRP accounts of retirement pension providers, and only one account can be held per financial company.
The Financial Services Commission explained, "Each retirement pension provider has different partnered investment management companies, and a single retirement pension provider plans to release services in partnership with multiple investment management companies." It added that "participants can select robo-advisor services that match their investment preferences and goals."
The contribution limit is 9 million won per IRP account annually, and it increases by 9 million won each year. Any unused limit not attached to a discretionary contract can be carried over to the following year. For example, if the limit for the first year is 9 million won and the discretionary contract amount is 5 million won, the limit for the second year becomes 13 million won.
If a participant enters into discretionary contracts with multiple investment management companies partnered with the retirement pension provider through their IRP accounts, the aggregate amount of multiple robo-advisor discretionary management services must not exceed the contribution limit.
Participants can also mix the method where they directly manage one IRP account and the method where the robo-advisor manages the operation. In this case, the contribution limit of 9 million won for the robo-advisor discretionary management service still applies.
The Financial Services Commission anticipates that as accessible asset management services become available at reasonable costs, participant convenience will improve. It also expects that in the long term, investments in revenue-bearing products by IRP participants will expand, contributing to enhanced retirement pension revenue and securing income for workers in their old age.
A Financial Services Commission official said, "We will closely monitor the operational performance, including the revenue status during the designated period of innovative financial services (up to 4 years), and if results are confirmed, we plan to pursue improvements in the system through legal amendments."