[Anchor]
Today (August 5), the KOSPI closed up 3.7% at 6,598, boosted by a strong semiconductor rally and foreign buying. While it is a significant gain, it remains nearly 30% lower compared to its peak last June. As the semiconductor rally falters and volatile market conditions persist, investors who directly manage their retirement pensions are increasingly seeing their returns shrink or suffering losses.
[Reporter]
Mr. A, an office worker in his 30s, switched his retirement pension to a defined contribution (DC) plan early this year, which allows him to directly manage the funds.
He invested about 70 million won of his retirement pension mostly in domestic semiconductor ETFs, but amid the sharp stock market crash last month, his valuation dropped by 20 million won from the peak.
[Mr. A / Retirement Pension Investor: I put about 70% almost entirely into semiconductors, focusing on places like Samsung Electronics and SK Hynix. (However, as the market fell,) I gave back almost everything....]
Online posts are also following one after another from people saying they suffered heavy losses after investing their retirement pensions in semiconductor stocks.
Retirement pension reserves, which surpassed 500 trillion won for the first time at the end of last year, have been on an upward trend to 553 trillion won in the second quarter of this year.
Among them, defined benefit (DB) plans, which are managed under company responsibility, saw a growth rate of just 1% in the second quarter, whereas DC plans surged by 14%.
It is estimated that many people switched to DC plans along with the booming stock market.
An analysis of pension accounts at a major domestic securities firm showed that half of the top 10 net-bought stocks from the beginning of this year until last month were domestic semiconductor-related ETFs.
The most heavily purchased ETF was a mixed product of Samsung Electronics, SK Hynix, and bonds, which recorded a return of -12.9% last month, with the rest also suffering double-digit losses.
[Kim Young-ki / Team Leader, Pension Consulting Department, Korea Investment & Securities: Since domestic semiconductor ETFs are too heavily concentrated in just two stocks, making concentrated investments in such high-volatility items is somewhat disadvantageous in terms of diversification....]
Experts advise that since the retirement age is fixed, a life-cycle approach such as Target Date Funds (TDFs) is necessary—investing in high-yield assets early on and gradually focusing on safe assets as retirement approaches.
(Photo courtesy of Kang Dong-chul | Video by Ahn Yeo-jin | VJ: Jung Han-wook | Design: Lee Jun-ho)
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