"Gave Back Almost Everything"... "Rollercoaster Kospi" Shakes Retirement Pensions

[Anchor]

Today (August 5), the Kospi closed up 3.7% at 6,598, driven by strong semiconductor stocks and foreign buying. While it is a significant gain, it remains nearly 30% lower compared to its peak last June. As the semiconductor rally faltered and volatile market conditions continued, investors who directly manage their retirement pensions have seen consecutive cases of shrinking returns or losses.

This is a report by Lee Tae-gwon.

[Reporter]

Mr. A, an office worker in his 30s, switched his retirement pension to a defined contribution (DC) plan early this year, allowing him to manage it directly.

He invested about 70 million won of his retirement pension mostly in domestic semiconductor ETFs. Amid the sharp stock market plunge last month, his valuation dropped by 20 million won from the peak.

[Mr. A / Retirement Pension Investor: About 70% went almost entirely into semiconductors, focusing on places like Samsung Electronics and SK Hynix. (However, as the market fell) I gave back almost everything....]

Online communities are also seeing a succession of posts from people who 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, reaching 553 trillion won in the second quarter of this year.

Among them, defined benefit (DB) plans, which companies are responsible for managing, 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-purchased stocks from the beginning of this year until last month were domestic semiconductor-related ETFs.

The most heavily bought ETF was a hybrid product mixing Samsung Electronics, SK Hynix, and bonds, but its return last month stood at -12.9%, with the others also suffering double-digit losses.

[Kim Young-ki / Team Leader, Pension Consulting Department, Korea Investment & Securities: Because domestic semiconductor ETFs are too heavily concentrated on just two stocks, making aggressive investments in such highly volatile assets can be disadvantageous in terms of diversification....]

As retirement timing is fixed, experts advise using a lifecycle approach like target-date funds (TDFs), which initially invest in high-yield assets and gradually focus on safer assets as retirement approaches.

(Video by Kang Dong-chul | Video Editing by Yeojin | VJ: Jeonghan | Design: Lee Jun-ho)
※ Please note: This article was translated by AI and may contain errors.