The amount of the first public fund-type retirement pension established by the government in 2022 has exceeded 1 trillion won after 2 years and 3 months. The annual revenue is 6.52%, similar to the low-risk products of the retirement pension default option.
The Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service held a ceremony on the 26th at the Korea Workers' Compensation and Welfare Service headquarters in Seoul to commemorate the establishment of 1 trillion won for the small and medium-sized enterprises retirement pension fund (Blue Seed).
Attending the event were Minister Kim Moon-soo of the Ministry of Employment and Labor, Chairman Park Jong-gil of the Korea Workers' Compensation and Welfare Service, asset management firms, honored organizations and individuals, and experts.
Blue Seed is a public fund-type retirement pension system first implemented in Korea in September 2022. It is being implemented to support the retirement life of employees working in small and medium-sized enterprises with fewer than 30 employees.
According to the Ministry of Employment and Labor, the retirement pension enrollment rate for workers in small and medium-sized enterprises with fewer than 30 employees is 23.7%. This contrasts with 76.2% for employees in businesses with 30 to 100 employees and 91.9% for those in businesses with over 300 employees, resulting in a gap of up to 68.2 percentage points.
As of the end of December last year, there were 23,233 business sites that introduced Blue Seed, with 108,515 members. Compared to when it was first implemented, both the number of business sites and members increased roughly tenfold.
An official from the Ministry of Employment and Labor noted, "The gap in business size can lead to a gap in workers' retirement life."
The annual revenue of Blue Seed for the last year was 6.52%. This is similar to the principal and interest guaranteed products of the retirement pension default option, which is being implemented starting in 2023.
The default option is divided into four categories: ultra-low risk, low risk, medium risk, and high risk. The annual revenue rate for the ultra-low risk category, operated for more than one year, is 3.32%, and 7.20% for low risk. Medium risk (11.77%) and high risk (16.83%) are both in double digits.
Blue Seed is managed by two operators, Samsung Asset Management and Mirae Asset Securities. In contrast, the default option is managed by 41 operators.
An official from the Ministry of Employment and Labor stated, "Unlike the default option, which combines funds, Blue Seed has a different asset allocation of 70% bonds and 30% stocks" but added, "Since there is only one option, it can only be operated stably."
The government plans to expand the options available for workers to enroll, similar to the default option, to improve the revenue of Blue Seed. It will also pursue expanding the enrollment eligibility to include workers in business sites with more than 30 employees.
Minister Kim Moon-soo said, "We will promote retirement pension reform, so that retirement pensions can become a core pillar of the income security system for the elderly," and added, "We will push for the mandatory implementation of retirement pensions."