Ahn Soo-myung, who is in her 50s, said her retirement savings of more than 20 years should be spent and managed however she wants without any government intervention.
“My retirement fund is mine, not public money for the government to manage,” she said. “It is my private property I have earned over many decades, and I don’t agree with the idea of using that in a fund that could be managed according to the government’s policy goals rather than my individual choice.”
She is among many Koreans expressing skepticism over the recent tripartite agreement between labor groups, management and the government to introduce a fund-type retirement pension where workers’ retirement savings are pooled into a single fund to be professionally managed.
Supporters say it can improve returns in an aging society, while critics say it could limit individual control and expose retirement savings to losses.
The major difference between the fund-type and the existing defined contribution plan is that the latter allows workers to individually choose investment products such as deposits, insurance and funds. Individual workers bear gains and losses, but most assets are in “principal-protected” products, resulting in low returns.
Ahn said she wants her money to be invested in equity market funds, rather than have fund managers run them for a commission fee.
“If I choose what I invest in, when I make money, I take all the profit. The fee is for products I chose. However, when I have fund managers operate them, I have to pay them fees I don’t want to pay. The government should have no say in it, especially since they are not going to recoup potential losses with taxpayers’ money.”
Similarly, control over private finances is a major factor for Lee Sung-won, an office worker in his 40s.
“I don’t trust financial products offered by the government, nor do I want to. Markets have been too volatile in recent years, and I prefer being able to see and control exactly how my money is invested, even if returns are lower.”
Some are also concerned that retirement savings could be exposed to political influence.
This has led to a public petition against the plan gaining more than 10,000 signatures, illustrating distrust toward the proposal for government-run, large fund-based management.
Early withdrawals from the retirement pensions are growing.
About 67,000 people withdrew a combined total of 3 trillion won ($2 billion) from the fund early last year, up 4.3 percent from a year earlier, citing home purchases and other reasons.