Bank's retirement pension soars 15% to $107 bn last year

Retirement pensions at banks in the fourth quarter of last year emerged as a haven for money that tried to generate a stable return, shunning away from risky assets such as stocks amid rising interest rates.

According to the Financial Supervisory Service's integrated pension portal on Tuesday, reserves of retirement pension funds comprising defined benefit, defined contribution, and individual retirement pension (IRP) at the nation's five major commercial banks, Kookmin, Shinhan, Hana, Woori, and Nonghyup, totaled 132.2 trillion won ($107.2 billion) in the fourth quarter last year, up 11% from 118.7 trillion won in the third quarter.

It represents an increase of 15% or 17.8 trillion won from a year earlier when the figure was 114.3 trillion won.

Rate hikes drove down the prices of risky assets such as stocks, instead boosting demand for high-interest deposit products.

With bank deposit rates once soaring above 5% per year, one could make stable returns through regular deposit products that guarantee principal and interest.

Regular deposit rates of retirement pension products with a five-year maturity at the five banks are 3.8-4.42% for defined benefit plans, 3.7-4.42% for defined contribution plans, and 3.7-4.42% for IRP.

Of the total retirement pension reserves of 132.2 trillion won, principal and interest-guaranteed products accounted for 97.3 trillion won, or about 74%, in total.

Write to So-Hyun Lee at y2eonlee@hankyung.com