DC-type Retirement Pensions to Be Transferable to IRPs at Other Financial Institutions

[Anchor]

It is time for Friendly Economy on Tuesday, and reporter Han Jiyeon is here with us. Han, we are talking about transferring retirement pensions to different companies today.

[Reporter]

Previously, transfers between different institutions were restricted to the same types: DB to DB, DC to DC, and IRP to IRP.

However, the government is now pushing for institutional improvements to allow DC-type pension plans to be transferred to Individual Retirement Pensions (IRPs) at other financial institutions.

Many of you might have wanted to switch the securities company or bank managing your retirement pension after leaving a job.

However, doing so has been more cumbersome than you might think.

You had to liquidate all your current funds and ETFs into cash first, and then repurchase them at the new financial institution.

Transferring transferable products without selling them, and simply moving the financial institution, is called an "in-kind transfer."

Retirement pensions come in three types: DB, where the company manages the funds and guarantees a fixed payout; DC, where you manage them yourself; and IRP, where you receive the money upon retirement and manage it yourself. Banks, securities companies, and insurance companies offer all of these.

The problem was that transfers were only allowed between the same categories until now, making it impossible to move a bank DC plan to a securities company IRP.

Discussions to lower this barrier began yesterday (August 24).

The Financial Supervisory Service gathered relevant institutions and companies to hold the first meeting of the "In-Kind Transfer Improvement TF."

The initiative aims to set up computer systems to allow transfers from DC plans to IRPs at other financial institutions. It also plans to include "suspended redemption funds"—funds where money is locked up and refunds are blocked because the underlying assets cannot be sold—which previously could not be sold or transferred.

Procedures will also become simpler.

Originally, verifying transfer intentions non-face-to-face required voice recordings, which caused many complaints about delayed processing.

Consequently, authorities have decided to seek alternative, secure verification methods alongside voice recording.

The direction for this improvement plan is set to be finalized by September, with system development scheduled to begin in October.

[Anchor]

What else is changing?

[Reporter]

Retirement pensions can be transferred more easily to securities companies that allow real-time ETF trading.

Originally, because banks and insurance companies operated under a trust system, even if you sold an ETF, you had to wait until the next trading day to repurchase it.

Securities companies, on the other hand, allowed repurchasing on the exact same day immediately after a sale.

Due to these inconveniences, over 5.2 trillion won flowed exclusively from banks to securities companies over the past one year and eight months.

Conversely, the money moving from securities companies to banks amounted to only about a quarter of that level.

Seemingly mindful of this trend, KB Kookmin Bank became the first commercial bank starting on the 20th to allow customers to use proceeds from selling ETFs in their retirement pension accounts to repurchase other ETFs on the same day.

However, this is not a system where customers place real-time orders directly like they do at securities companies.

Instead, when a customer submits an investment instruction, the securities company executes trades across multiple instances, and KB Kookmin Bank reflects the results in the account.

Still, it has shortened the wait from the next trading day to the same day.

Hana Bank is also scheduled to launch the same service during September.

[Anchor]

Lastly, it is said that updating various accounts after changing one's name will become a bit less cumbersome.

[Reporter]

This is expected to take effect starting in the first half of next year.

If you submit a consent form to just one financial institution you frequently use, your information at other financial institutions you trade with will be automatically updated the next day.

For those who have changed their names or resident registration numbers, there used to be a mountain of things to do afterward.

Regardless of whether it was a bank, card issuer, or securities company, you had to visit every single place you traded with and request updates with your new information.

Moving forward, submitting a "Consent Form for Personal Information Provision and Utilization" to just one frequently used financial institution will allow the Korea Credit Information Services to verify the information, and then automatically update your details across all other financial institutions you trade with by the next day.

To make this possible, the Ministry of the Interior and Safety is expanding the scope of personal information handed over to the Korea Credit Information Services.

Previously, they only provided whether a resident registration number had changed, but moving forward, they will hand over detailed information both before and after changes for names, dates of birth, and genders.

There is, however, one exception.

Identity verification methods like joint certificates or OTPs will not change automatically and must be reissued manually.

Why is this change happening? Because an increasing number of people are legally changing their names or resident registration numbers lately due to personal information leaks and identity theft damage.

In 2024 alone, name change approvals exceeded 80,000 cases, and resident registration number changes surpassed 1,200 cases.
※ Please note: This article was translated by AI and may contain errors.