Pension savings cancellations surge 65% in South Korea as investors chase stock market gains

South Koreans are increasingly cashing out their pension savings to chase stock market gains, with a dramatic surge in cancellations observed in the first five months of 2024. Nearly 500 pension savings accounts were terminated each day during this period, marking a substantial 65% increase compared to the same timeframe last year.

This trend, dubbed a "money move," reflects a broader phenomenon where investors are channeling funds into the stock market, particularly as the KOSPI index soared past 8,000 points in May. The allure of rapid returns in the booming market appears to be outweighing long-term retirement planning for many.

Data from the Financial Supervisory Service, obtained by lawmaker Song Eon-seok, revealed that 72,477 pension savings accounts were canceled between January and May this year. This represents an increase of 28,523 accounts from the previous year's 43,954 cancellations. The total value of these canceled savings also saw a significant jump, rising by approximately 82.6% to 1.74 trillion won (about $1.26 billion USD), with the average payout per cancellation reaching around 24 million won ($17,500 USD).

Analysts suggest that the doubling of the KOSPI index from around 4,000 at the start of the year to over 8,000 in just five months has drawn even retirement funds into the stock market. This shift is also evident in the banking sector, where major banks have reported a significant outflow of personal deposits into stock investments.