Driven by the weakness of the domestic stock market, pension fund reserves at the end of the third quarter fell 2.1% from the previous quarter to 542.1214 trillion won. This marks the first decline since the first quarter of 2020, when the coronavirus pandemic (outbreak) was in its early stages, a span of more than six years.
According to the Financial Supervisory Service's Integrated Pension Portal on the 20th, performance-linked (non-principal-and-interest-guaranteed) reserves decreased by 6.3% from the previous quarter to 185.2078 trillion won.
As the valuation of funds and ETFs (exchange-traded funds) declined, the investment trend that had been expanding, centered on ETFs, during the first half due to a booming stock market reversed. The share of performance-linked products in total pension reserves also dropped by 1.5 percentage points, from 35.7% to 34.2%. Conversely, principal-and-interest-guaranteed product reserves increased by 0.2% to 356.9051 trillion won.
By industry sector, the securities sector, which has a high proportion of performance-linked products, recorded the largest decline. Securities sector pension reserves fell 2.9% from the previous quarter to 160.2935 trillion won, and their share of total pension reserves decreased by 0.3 percentage points to 29.6%. Banking sector reserves declined by 2.1% to 275.4860 trillion won, while insurance sector reserves fell by 0.9% to 106.3419 trillion won.
In the securities industry, reserves decreased for all firms except Kiwoom Securities, which recently launched its pension business. Mirae Asset Securities and Samsung Securities saw declines of 4% and 1.5%, respectively, while Korea Investment & Securities (1.9%), Hyundai Motor Securities (1%), and NH Investment & Securities (3.8%) also recorded decreases in reserves.
The operator with the largest reserves was Samsung Life Insurance (57.5486 trillion won), followed by Shinhan Bank (57.2252 trillion won) and KB Kookmin Bank (52.2226 trillion won). Mirae Asset Securities maintained its top position in the securities industry with 49.9034 trillion won, ranking fifth overall.
By product type, the decline in Individual Retirement Pensions (IRP) was notable. IRP reserves fell by 3% from the previous quarter to 161.3451 trillion won. Defined Contribution (DC) plans decreased by 2.3% to 159.4993 trillion won, and Defined Benefit (DB) plans dropped by 1.3% to 221.2770 trillion won.
The downward trend in pension fund reserves is expected to continue into the fourth quarter. This is because stock market weakness persists, with the KOSPI index continuing to decline even after entering October. A financial investment industry official stated, "As the stock market has shown weakness since the start of the fourth quarter and future outlooks are not positive, the scale of pension funds may decrease in the future."
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