South Korea's retirement pension assets fell by about 11.8 trillion won ($8.2 billion) in three months as domestic stocks slid, with individual retirement pension accounts posting the steepest drop. Returns on some brokerages' retirement products also fell sharply.
Retirement Pension Assets Fall Nearly 12 Trillion Won, With Brokerages Hit Harder
Third-quarter results from 43 retirement pension providers, disclosed on the Financial Supervisory Service's integrated pension portal on the 23rd, showed combined assets of 542.1214 trillion won across defined benefit (DB), defined contribution (DC) and individual retirement pension (IRP) plans. That is down 11.7565 trillion won, or 2.12%, from 553.8779 trillion won in the previous quarter.
Brokerages saw a bigger decline than the overall average. Retirement pension assets at 15 brokerages stood at 160.2935 trillion won at the end of the third quarter, down 4.7533 trillion won, or 2.88%, from 165.0468 trillion won three months earlier.
By plan type, IRP accounts fell the fastest. IRP assets in the brokerage industry dropped to 62.7119 trillion won at the end of the third quarter from 65.6262 trillion won at the end of the second, a decline of 2.9143 trillion won, or 4.44%, in three months.
An IRP is a pension account that holds severance pay received when a worker changes jobs or retires, and to which individuals can also make additional contributions for investment.
DB assets also fell, to 42.6501 trillion won, down 1.256 trillion won, or 2.86%, from the previous quarter. DC assets declined 583 billion won, or 1.05%, to 54.9315 trillion won.
Mirae Asset Securities Down More Than 2 Trillion Won as Major Brokerages Decline Across the Board
Among brokerages, Mirae Asset Securities (006800) recorded the largest drop. Its retirement pension assets stood at 49.9034 trillion won at the end of the third quarter, down 2.1176 trillion won, or 4.07%, from 52.021 trillion won in the previous quarter.
Korea Investment & Securities fell 517.1 billion won, or 1.96%, to 25.8873 trillion won over the same period. NH Investment & Securities (005940) was down 462.3 billion won, or 3.79%, at 11.7466 trillion won. Samsung Securities (016360) fell 422.5 billion won, or 1.50%, to 27.6694 trillion won.
KB Securities' assets fell 414 billion won, or 4.10%, to 9.6865 trillion won. Shinhan Securities (008670) declined 351.4 billion won, or 4.05%, to 8.3317 trillion won. Hyundai Motor Securities (001500) fell 192.2 billion won, or 1.00%, to 18.9431 trillion won, while Daishin Securities (003540) and Hana Securities declined 151.6 billion won and 90.5 billion won, respectively.
Kiwoom Securities (039490) bucked the trend, with retirement pension assets rising 123.3 billion won to 188.2 billion won at the end of the third quarter from 64.9 billion won at the end of the second, a gain of about 190%.
Returns Slide With KOSPI as IRP Gains Fall From Above 50% to the Teens
The decline in retirement pension assets is attributed to the drop in domestic stocks during the third quarter. The KOSPI, which had climbed to the 9,000 level at the end of June, fell to the 6,800 level by the end of September. Returns on non-principal-protected IRP products, which invest in equities and other risk assets, fell steeply.
One-year returns on some brokerages' non-principal-protected IRP products, which stood in the 40% to 50% range at the end of the second quarter, dropped to the 10% to 20% range by the end of the third.
Korea Investment & Securities saw the one-year return on such products fall to 12.94% from 44.25%, a decline of 31.31 percentage points. Mirae Asset Securities fell to 13.80% from 46.18%, down 32.38 percentage points. Samsung Securities dropped to 14.48% from 48.23%, down 33.75 percentage points.
NH Investment & Securities' return fell to 14.99% from 47.80%, down 32.81 percentage points. Shinhan Securities declined to 15.43% from 50.95%, down 35.52 percentage points.
KB Securities posted the largest decline among the major brokerages surveyed, falling to 14.95% from 52.98%, down 38.03 percentage points.