'I’ll manage my own retirement pension'

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'I’ll manage my own retirement pension'

Published: 19 Jan. 2026, 00:03

Audio report: written by reporters, read by AI

Ha Hyun-ock

The author is an editorial writer at the JoongAng Ilbo.

A petition posted on the National Assembly’s public petition board on Jan. 12 captured a growing unease among workers over the government’s plan to turn Korea’s retirement pension system into a centralized fund.

“Retirement pensions are private assets accumulated as compensation for a lifetime of work,” the petition read. “Yet fund-based management restricts individuals’ control over their own assets and creates a structure in which responsibility is unclear if management fails. […] The state should never manage private assets. Young people in their 20s and 30s already worry they may not even receive the national pension. The government should not interfere with retirement pensions as well.”

People are seen inside the office of the National Pension Service in Seodaemun District in western Seoul on March 20, 2025 [NEWS1]

The petition calls for a halt to the push toward fund-based management and opposes any blanket conversion without workers’ consent. Put more bluntly, its message is simple: “I’ll manage my own retirement pension.”

The petition followed remarks on Jan. 7 by Han Jeoung-ae, policy chief of the Democratic Party, who said the ruling party and government would unveil concrete measures to manage the retirement pension fund later this month, signaling a fast-track approach. As of Jan. 18, the petition had garnered 3,859 signatures.

Under the proposed reform, retirement pensions now managed by individual financial institutions would be pooled into a single large fund and run by a designated body. Since the retirement pension system was introduced in 2005, large companies have typically offered either defined benefit plans managed by firms or defined contribution plans managed by individual workers through contracts with private financial institutions. Smaller businesses, however, still rely largely on the traditional severance pay system rather than formal pensions.

The government and the ruling party cite two main justifications for fund-based management. One is to close coverage gaps by gradually making retirement pensions mandatory for workplaces that still operate under the severance pay system. The other is to boost returns. Currently, 82.6 percent of retirement pension assets are parked in principal-protected products, resulting in an average annual return of just 2.86 percent over the past five years. By pooling assets and exploiting economies of scale, officials argue, returns could be improved.

The rationale appears straightforward, but the issue is far from simple. Supporters often point to the performance of the National Pension Service and the Small Business Retirement Pension Fund, known as “Blue Seed,” as evidence that larger funds deliver higher returns. That logic, critics say, rests on an overly broad assumption. Size alone does not guarantee better performance, and turning deferred wages into a centralized fund raises serious questions about investment choice, property rights and governance.

The most fundamental concern emerges when investments go wrong. Any losses would ultimately be borne by workers themselves. Without the ability to choose investments, participants would have little recourse beyond absorbing the damage. Japan’s AIJ scandal looms large in such discussions. In that case, a trustee mismanaged roughly 200 billion yen (about $1.2 billion) in pension assets, concealed the losses and wiped out the retirement savings of some 880,000 workers. Because decision-making authority lay with the fund while the beneficiaries were workers, accountability proved murky, and disputes dragged on.

Perhaps most sensitive is the way fund-based management revives what many call “national pension trauma.” Critics fear retirement pensions could become another tool for policy goals, much like the national pension has been accused of serving as a de facto piggy bank for currency stabilization or stock market support. The petition warned that concentrating retirement pension assets into a single fund would heighten the risk of political and policy intervention, with a single misjudgment directly undermining the livelihoods of millions of retirees.

Such concerns are not purely hypothetical. The government, which has pledged to usher in a “Kospi 5,000 era,” has already leaned on the National Pension Service as a market stabilizer. President Lee Jae Myung has instructed officials to review expanding the pension fund’s domestic investment ratio. Late last year, when the won-dollar exchange rate surged, foreign exchange authorities even mobilized the national pension to help stem the slide. The effect was short-lived. As the currency weakened again, critics argued that the fund had effectively burned money, validating opponents' fears of further fund consolidation.

Distrust of the government’s intentions has fueled more pointed suspicions. Some believe retirement pension fund management could serve as a backstop for domestic equities when the national pension needs to sell stocks to pay benefits. Retirement pension assets totaled 431.7 trillion won (about $293 billion) at the end of last year and are projected by the Korea Capital Market Institute to exceed 1,172 trillion won by 2040. Others go further, suggesting the reform could channel vast pools of retirement savings into the bond market to absorb a growing supply of government debt.

Kwon Chang-jun, vice minister of employment and labor, presides over the inaugural meeting of a tripartite task force on strengthening the functions of retirement pensions at the Seoul Regional Office of Employment and Labor on Oct. 28, 2025. [PROVIDED BY THE MINISTRY OF EMPLOYMENT AND LABOR]

The web of interests surrounding retirement pensions is dense and complex. Employers, workers, financial institutions and the state all have stakes, and their priorities often diverge. That complexity demands careful and open debate, even if it slows the process. Rushing ahead without broad public discussion risks deepening suspicion and resistance.

Managing money for old age is a legitimate policy concern. But critics argue there is a clear boundary the state should not cross. After the national pension, they say, the government has no mandate to extend its reach into retirement pensions that are, at their core, private assets earned through work. Without transparent debate and safeguards, any attempt to do so may only further erode trust.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.