The Financial Supervisory Service said on the 25th that it held a "2026 retirement pension provider compliance oversight briefing" for about 100 compliance and retirement pension officials at 46 banks, securities firms, and insurers.
The briefing was arranged to share key findings from recent retirement pension inspections by the Financial Supervisory Service (FSS), including cases of infringing on workers' benefit rights and failures to fulfill the duty of due care, and to strengthen retirement pension providers' voluntary compliance capabilities.
Kim Gi-bok, head of the pension supervision office at the Financial Supervisory Service (FSS), said in opening remarks that while retirement pensions have established themselves as a key system to ensure workers' stable old-age security and their scale continues to grow, there are cases that overlook the system's basic principles. Kim also urged that providers, with compliance officers at the center, take responsibility and interest and carry out related tasks thoroughly.
The Financial Supervisory Service (FSS) cited six main issues found in retirement pension inspections: ▲ offering different products based on corporation size ▲ lax management for users of "maturity re-deposit" ▲ insufficient efforts to present products favorable to users ▲ poor management of long-term non-investing enrollees ▲ inadequate support for enrollees who want a "physical transfer" ▲ operating payout methods that are disadvantageous to enrollees.
First, some retirement pension providers actively presented high-yield products with limited allotments mainly to large corporations or key clients with large asset balances, while relatively neglecting small businesses. In response, the Financial Supervisory Service (FSS) plans to closely review the appropriateness of the standards and procedures for product presentation through future inspections.
Defined benefit (DB) plan sponsors that enroll using a maturity re-deposit method also tended to re-enroll in unfavorable existing products even when products with favorable terms, such as higher interest rates, were available. Many retirement pension providers did not make efforts to provide such product information.
At the briefing, the Financial Supervisory Service (FSS) shared these cases and asked providers to thoroughly fulfill their duty of due care in product presentation. It also said that about 30% of all defined contribution (DC) enrollees have left their balances uninvested for one to two years or more as idle funds (cash), so management and guidance for long-term non-investors are needed.
When DC enrollees receive retirement pensions into their company's individual retirement pension (IRP) accounts, in many cases they were not properly informed that a physical transfer was possible and of its advantages. As a result, many enrollees sold products they had been holding and then repurchased the same products in the transferred IRP accounts, incurring unnecessary fees or suffering disadvantages such as not being able to invest their balances during that period.
The Financial Supervisory Service (FSS) plans to examine the appropriateness of providers' processing of physical transfers during upcoming inspections. It also asked providers to self-check payout methods that disadvantage enrollees and to improve unreasonable operating practices for enrollees.
In the third quarter of this year, the Financial Supervisory Service (FSS) plans to issue a press release on precautions consumers should know from the retirement pension inspection results. An FSS official said the agency will actively support workers in using the retirement pension system as an effective means of preparing for old-age funds.