DC Retirement Pensions Can Be Transferred to Other Companies' IRPs, Including Suspended Redemption Funds

▲ Financial Supervisory Service

The in-kind transfer of retirement pensions will be expanded to allow defined contribution (DC) plans to be transferred to individual retirement pension (IRP) accounts at other financial institutions.

The Financial Supervisory Service (FSS) announced that it held a task force (TF) meeting today (the 24th) with the Korea Securities Depository, associations, Korea Securities Finance Corporation, and retirement pension providers to discuss these measures.

Currently, retirement pension products can only be transferred to other financial institutions within the same system—such as DB to DB, DC to DC, and IRP to IRP—and accounts holding suspended redemption funds are restricted from in-kind transfers.

The FSS stated that it discussed developing IT systems to enable transfers from DC plans to IRPs of other providers and including suspended redemption funds among transferable products.

In addition, the authority is exploring alternative methods for non-face-to-face identity and intent verification other than voice recording.

This is due to procedures being delayed when relying on voice recordings.

In cases where an in-kind transfer application is canceled or rejected, subscribers will be provided with detailed reasons for the decision.

The FSS plans to finalize the improvement direction by September and begin system development in October.

According to the FSS, following the introduction of the retirement pension in-kind transfer service at the end of October 2024 through the end of June this year, 15.9 trillion KRW (approximately 250,000 cases) has been transferred.

This averages 26.1 billion KRW (409 cases) per day.

In the first half of this year, transfers surged to 6.9 trillion KRW, more than double the 3.2 trillion KRW recorded in the same period last year.

By sector, transfers from banks to securities firms accounted for the largest share at 5.2 trillion KRW (33%), followed by transfers between banks at 4.5 trillion KRW.

The FSS noted that defined benefit (DB) plans primarily moved from securities firms to banks and insurance companies, while DC and IRP plans prominently shifted from banks and insurance companies to securities firms.

By pension scheme, the transfer amounts were led by IRP at 6.8 trillion KRW, followed by DC at 4.8 trillion KRW, and DB at 4.3 trillion KRW, explaining that in-kind transfers are most active within IRP accounts.

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