Corporate retirement pension funds managed by South Korea's financial institutions topped 172 trillion won ($153 billion) as of September last year, but their annual rate of return was low, government data showed Monday.
The retirement pension scheme, which was introduced in 2005, is meant to help fund retirees' severance payments. Companies and employees make contributions to the pension funds, and employees can receive the pension after retirement.
The accumulated corporate retirement pension funds stood at 172.1 trillion won as of the end of September last year, compared with 168.4 trillion won in 2017, according to the data from the Financial Supervisory Service.
The annualized return rate of the retirement pension funds averaged 1.88 percent in 2017. It was lower than the average return rate of 2.39 percent for the past five years.
Retirement pension plans that guarantee principal and interest accounted for 83.3 percent of the total, while the remainder were schemes that pay returns from investment, according to the data.
The government has been encouraging companies to adopt the retirement annuity program as part of efforts to help reduce the financial burden of severance payments, as well as to allow employees to receive higher and more stable pension payments. (Yonhap)