Chairman Kwon Yong-won of the Korea Financial Investment Association(KOFIA)

Chairman Kwon Yong-won of the Korea Financial Investment Association (KOFIA) said the default option system should be included in the funding-type retirement pension system when the National Assembly goes over the system before its approval next month.

The KOFIA chairman at a summer media briefing session held on Aug. 13 said the system is necessary to boost the profit rate of the workers retirement pension funds, but it was not included in the bill.

He said he will try to include it in the bill before it goes on to parliamentary approval in its next regular session in the fall.

The default option allows subscribers of the DC type retirement pensions to let their retirement pensions to be managed as asset distribution-type retirement pensions unless they specifically make special notes otherwise.

It is the same system run by the U.S. and Australia. He said current talks on reforming the retirement pension system stems from the fact that its low profit ratio has been too low and unable to boost the rate to around 5 to 6 percent, to really take care of the lives of pensioners.

The chairman also stressed that the subscribers of the DB type retirement pension must also make the IPS report, arguing that the profit rates of the retirement funds run by private corporations have not been that high if the inflation rates were taken off. They keep the funds in the bank accounts without having the know-how to run the funds in many cases.

The retirement pension system reform bill up for parliamentary approval includes the IPS, but not the default option system. IPS is a report containing the information on such key issues as the fund distribution, targeted profit rates, the procedure for investment decision-making, among others.

The chairman also called for the creation of a large fund to nurture startups whose market value is larger than 1 trillion won. India has a vision to create a market larger than $1 trillion in value under the digital economy, while Japan’s Softbank already created a $100 billion fund in 2016 and has been making moves to create another huge fund in 2019.

“We should also create a large fund tentatively named Innovation Korea Fund to help the non-listed firms with very good growth potentials,” KOFIA noted.
KOFIA’s goals are to ensure fair business practices among members, the fair trading of securities and investor protection, and the development of the nation’s capital market and financial investment services industry.

KOFIA performs five major functions: self-regulation, market management, upgrading the financial investment industry, the education and training of professionals, and fostering a sound investment culture. As the primary SRO, KOFIA oversees a wide spectrum of areas in the Korean financial investment industry. All securities, asset management and futures firms in Korea are KOFIA members and are subject to KOFIA’s self-regulatory operations.

Previously having launched KOSDAQ, KOFIA is now operating FreeBoard, an OTC Bulletin Board, and the OTC Bond Market.
KOFIA offers services such as making policy recommendations, providing member services and guiding the globalization of the Korean financial industry. KOFIA cultivates industry professionals.

As a founding member of the International Forum for Investor Education (IFIE), KOFIA established the Korea Council for Investor Education (KCIE), which works to instill a sound investment culture, pioneering investor education in Korea.

KOFIA consists of 244 members as of the end of July 2009. KOFIA also oversees the licensing of investment professionals such as Certified Securities Investment Advisors and Certified Derivatives Investment Advisors.

A view of the entrance of the building in Seoul, where KOFIA has offices. (Photos: KOFIA)