South Korea to allow direct DC pension transfers to other brokerages' IRPs

Starting as early as next year, individuals in South Korea will be able to directly transfer their Defined Contribution (DC) type retirement pension assets to an Individual Retirement Pension (IRP) account at a different brokerage firm. This change aims to resolve significant consumer inconveniences currently faced due to restrictions on asset transfers.

Presently, asset transfers are limited to within the same pension type. This means DC assets can only be moved to another DC account, and similarly for DB (Defined Benefit) and IRP accounts. This limitation has led to numerous complaints from consumers who wish to consolidate their retirement funds or switch providers for better management or returns.

The Financial Supervisory Service (FSS) announced on the 24th that it has established a task force, including representatives from the Korea Securities Depository, relevant associations, and retirement pension providers. This group will discuss and finalize improvement measures. Since the implementation of the physical transfer service for retirement pensions in October 2024, the cumulative transferred amount reached 15.9 trillion won by the end of June this year, with an average of 26.1 billion won transferred daily.

Despite the growing volume of transfers, issues such as the inability to move assets between different pension types and restrictions on accounts holding funds with redemption halts have persisted. The mandatory voice recording to confirm the intention for physical transfer has also been cited as a procedural bottleneck. The task force is expected to finalize improvement directions by next month, with system development commencing in October, targeting a launch next year.