Ruling Party, Government Aim to Pass Fund-Type Retirement Pension Bill as Early as This Year

[Financial News] A bill to introduce “fund-type retirement pensions,” which could reshape the retirement pension market worth hundreds of trillions of won, is expected to clear the National Assembly as early as this year. The ruling party has introduced a series of related bills, and the government’s bill is also in its final stages. Legislative discussions are expected to gather pace after the National Assembly audit. The key issue is who will manage fund-type retirement pensions.
According to political sources on the 7th, the ruling party and the government will begin substantive discussions on legislation for fund-type retirement pensions after the National Assembly audit. Lee Yong-woo of the Democratic Party of Korea (DPK), speaking to reporters after a press conference that day on the introduction of a related bill, said, “The government’s bill may form the core, but I think all the existing bills (introduced by DPK lawmakers) will probably be brought together for discussion.” He added, “I hope that process will be completed and the bill passed within the year.”
Fund-type retirement pensions, being pursued as a national policy agenda by the Lee Jae-myung government, involve a specialized institution pooling multiple participants’ accumulated contributions into a single fund and managing it. The current system is primarily contract-based: employers or participants sign contracts with banks, insurers, securities firms and others, then choose financial products. Twenty years have passed since the system was introduced. The parallel introduction of a fund-based option is expected to help address low returns and high fees through economies of scale and professional asset management.
The bills put forward by DPK lawmakers share the goal of introducing a fund-based system, but differ over who would manage the funds. Han Jeong-ae’s bill centers on a corporate and industry model built around a nonprofit trustee corporation involving labor and management, while Ahn Do-geol’s bill emphasizes competition among private asset managers. Park Hong-bae’s bill would establish a separate retirement pension corporation under the Ministry of Employment and Labor, allowing the public sector to participate directly in fund management.
Lee Yong-woo’s bill would allow existing public pension management agencies, such as the National Pension Service, to enter the market instead of establishing a separate public institution. It would enable financial institutions, labor-management alliances and public pension management agencies to compete, while limiting public pension agencies’ market share to 10% for the first three years after the law takes effect and no more than 30% for five years.
Ultimately, the key issue in discussions to bring the bills together after the audit is expected to be how to design the fund managers, rather than whether to introduce a fund-based system in the first place. Coordination between the lawmakers’ bills and the government’s bill is expected over whether to center the system on private asset managers, establish a separate public institution, or allow existing public pension agencies, including the National Pension Service, to participate.

[email protected] Song Ji-won Reporter