April 26, 2024

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[THE INVESTOR] The returns on major private pension programs remained at low level due to record low interest rates, according to industry data on Jan. 23.

The yield rate of most pension funds over the past seven years stood at below 5 percent as of end-September, according to the data.

The analysts said such a low return translated into a de facto loss, considering price hikes over the seven-year period.

A pension fund operated by Hana Financial Investment posted the highest return rate of 4.67 percent over the 2009-2016 period, followed by the one managed by Daishin Securities with a 4.52 percent return during the cited period. A fund operated by Mirae Asset Securities came next with a 4.49 percent gain.

Such a low rate was partly attributed to record low interest rates.

The analysts said over 90 percent of some 130 trillion won (US$111.40 billion) under management by pension fund operators is tied to “defined” benefit programs, under which the principal or the money invested is protected.

This prevents operators of such funds from making risky investment bets, forcing them to rely on bank interest rates, they noted.

(theinvestor@heraldcorp.com)