Savers who switch retirement plan providers often assume every product in their account moves with them. Products that fail to meet transfer conditions, however, must be sold. Term deposits are then subject to early-withdrawal rates, and funds can be redeemed at a loss.
Joo Hyun-ji (pictured), a manager at Woori Bank's pension business division, said products that cannot be transferred must be sold and moved as cash, and that overseas equity funds and target date funds can take up to 14 business days to redeem. Because the money is paid out only after the slowest redemption clears, savers should check their holdings and the time required before initiating a transfer, the manager said.
Transfers Allowed Only Between Identical Plan Types
From late October 2024, when the in-kind retirement plan transfer service launched, through the end of June this year, 15.9 trillion won ($11 billion) moved across about 250,000 transactions, according to the Financial Supervisory Service. In the first half of this year alone, 6.9 trillion won was transferred, more than double the figure for the same period a year earlier.
In-kind transfer allows savers to change retirement plan providers without liquidating their holdings. Unlike the earlier method, which required cashing out and repurchasing, it reduces the penalties that can arise from early term-deposit withdrawals or fund redemptions.
For now, in-kind transfers are permitted only between identical plan types. Defined benefit plans move to defined benefit plans at another provider, defined contribution plans to defined contribution plans, and individual retirement pensions to individual retirement pensions. Defined contribution plans and individual retirement pensions must be transferred in full; savers cannot move only part of the balance.
Defined contribution plan members can transfer only among the providers their employer has designated in its retirement plan rules. Having a defined contribution account at a preferred provider does not mean a saver can move the money there freely. Joo said defined contribution transfers must stay within the providers the employer has contracted with, so savers should first check with their company's retirement plan department whether a change is possible. Some workers mistakenly believe they can choose a provider or plan type at will, the manager said.
Financial authorities are working on a computer system overhaul that would allow defined contribution balances to be transferred in kind to an individual retirement pension at another provider. At present, a worker leaving a job who wants to move a former employer's defined contribution balance into an outside individual retirement pension must liquidate the holdings. Existing products also cannot be carried into a new employer's defined benefit plan. Under a defined benefit plan, the company bears the contributions and investment responsibility, so it is not an individual account that can receive products a worker managed at a previous job.
Default-Option and Unavailable Products Must Be Sold
Even when a product is eligible for in-kind transfer, the receiving provider must also offer it. The same fund or exchange-traded fund cannot move intact if it is absent from the new provider's product lineup.
Default-option products are a leading example of what cannot be transferred. Because each provider assembles its own default-option products, they are not carried over to another provider. A provider's proprietary principal-and-interest guaranteed products and funds with suspended redemptions may also face transfer restrictions.
Savings bank term deposits require a check on deposit insurance limits as well. If the new retirement plan account already holds a deposit at the same savings bank, savers should confirm whether the combined amount after the transfer exceeds the protected limit. Exceeding the limit can make the in-kind transfer of that product difficult.
A mix of transferable and non-transferable products does not mean the entire account is sold. Eligible products move intact, and only the rest are sold and transferred as cash. But because defined contribution plans and individual retirement pensions must be transferred in full, savers cannot leave only the non-transferable products in the old account.
Joo said one saver applied for an in-kind transfer but had to accept early withdrawal because most of the balance was invested in default-option products. Eligible products can move intact while only ineligible ones are liquidated, but many clients cancel the transfer application after reviewing the conditions, the manager said.
Long Redemptions Can Leave Up to 14 Business Days Out of the Market
When products must be liquidated, the transfer takes longer to complete. Term deposits typically settle one business day after a sale order, and ordinary funds take about two business days. Overseas equity funds and target date funds can take up to 14 business days to redeem.
For savers holding multiple products, the money is paid out only after the product with the longest redemption period has been sold. If a shortage of cash requires additional sales to cover transfer fees, the remittance can be delayed further.
A saver holding both domestic and overseas equity funds must wait for the overseas redemption proceeds even after the domestic fund has settled. Adding the time needed to select and buy products at the new provider, savers can be out of the market for more than two weeks. If the market rises during that period, they miss the gain; if the redemption price is set after a decline, a paper loss becomes a realized one. Term deposits sold before maturity can also be subject to early-withdrawal rates lower than the contracted rate.
Joo said the time needed to sell products and remit the balance varies by provider and by holdings. When markets are volatile, savers should weigh the fees a transfer would save against the losses or opportunity costs that can arise during the sale process, the manager said.
Start With a Pre-Transfer Inquiry
Choosing a retirement plan provider should not come down to short-term returns alone. Savers should examine long-term returns, fees and product lineups, along with advisory and account management services and the convenience of mobile apps.
Even when repurchasing a product of the same name at a new provider, the share class, expenses and applicable interest rate may differ from before. Canceling a term deposit and signing up again does not carry over the rate previously applied.
The pre-transfer inquiry service for in-kind retirement plan transfers, introduced in July 2025, lets savers check which providers can receive their holdings without first opening a separate account. After an application is filed, the transfer takes effect only after the existing provider completes a final confirmation of intent.
Joo said retirement savings are long-term assets managed over 20 to 30 years or more, so frequently switching providers based on short-term returns is unwise. Savers should confirm which products can be transferred and what early-withdrawal penalties apply, and compare product lineups, fees and account management services as well as returns before deciding, the manager said.
Jung Ji-won's Money Trace follows the investment flows of wealthy clients through financial industry experts, tracing where the money goes and how the affluent allocate their assets.
