Retirement pension savings have lost almost 1 trillion won ($827 million) this month in South Korea as more seek to cancel their policies despite penalties, with the coronavirus taking toll on personal economy after companies streamline or send employees on unpaid leave.
According to the nation’s top six annuity operators – Samsung Life Insurance, Shinhan Bank, KB Kookmin Bank, Industrial Bank of Korea, Hana Bank and Woori Bank on Thursday, a combined outstanding balance in retirement pension plans, including defined-benefit (DB), defined-contribution (DC) and individual retirement pension (IRP) plans, amounted to 119.54 trillion won ($98.3 billion) as of March 20, down by 977.2 billion won from 120.52 trillion won at the end of February.
The sudden drop in pension balance underlines the virus strain on livelihood as pensions are regarded the last resort for salary-earners.
The outstanding balance of DB pension plan, a type of employer-sponsored pension plan that provides specific payout in retirement, slipped 275.8 billion won this month to 67.6 trillion won, and that of DC pension plan that allows both employee and employer to contribute and invest to save funds for retirement plummeted 575.6 billion won to 33.86 trillion won.
Even the IRP plans, in which an employee can manage fund for retirement on top of either DB or DC type of pension accounts, saw money outflow. Normally, money pulled out from DB and DC plans tend to flow in to the IRP accounts. But the outstanding balance of IRP accounts shed 125.8 billion won this month despite 851.4 billion won in loss from DB and DC pension accounts, indicating more people are in need of emergency funds.
By Lee Seung-hoon and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]