Woori Bank's DC, IRP pension returns surge from single digits to over 50% in a year

Woori Bank's defined contribution and individual retirement pension returns both surpassed 50 percent in the second quarter of this year — a dramatic turnaround from the single-digit figures posted just a year ago, driven by a rising stock market and a management-focused asset management system the bank rolled out in earnest this year.

According to a Korea Federation of Banks disclosure Wednesday, Woori Bank's non-principal-guaranteed DC return for the second quarter reached 57.1 percent — the highest among the four major commercial banks. The figure marks a rise of nearly 50 percentage points from 2.84 percent in the first quarter of last year and 6.92 percent in the second quarter of last year.

The individual retirement pension, or IRP, return followed a similar trajectory. The non-principal-guaranteed IRP return climbed to 51.71 percent in the second quarter of this year, up from 3.24 percent in the first quarter of last year and 6.96 percent in the second quarter of last year — the second-highest level among the four major commercial banks.

Woori Bank attributed the sharp improvement to a combination of rising share prices and a strategic shift this year away from a product-centered approach toward one focused on active management. "While the total retirement pension reserve itself is growing, most subscribers hold a high proportion of principal-guaranteed products, keeping their actual returns low," a Woori Bank official said. "Many subscribers do not know what choices to make after signing up, which is why it is necessary for experts to review each subscriber's asset structure."

To address this, Woori Bank has fully launched this year a "visiting pension service" that it piloted last year. Branch staff and pension specialists from the bank's headquarters visit companies directly to provide tailored retirement pension consulting to employees. After reviewing subscribers' DC and IRP accounts, the bank proposes customized investment strategies that reflect each person's risk appetite and expected retirement timeline.

Alongside this, the bank offers expert-designed recommended portfolios through its website and other channels. Each portfolio consists of three to four core funds selected based on a comprehensive assessment of the subscriber's investment profile, life stage and market conditions, with ongoing monitoring provided afterward.

Going forward, Woori Bank plans to expand pension products developed in collaboration with Woori Financial subsidiaries while building a digitally based asset management infrastructure through system upgrades.

According to the Financial Supervisory Service, the total retirement pension reserve across the financial sector stood at 501.4 trillion won ($340 billion) at the end of last year, up 16.1 percent from the previous year-end. Principal-guaranteed products accounted for 75.4 percent of the total, reflecting an overwhelming preference for low-risk investment. The FSS plans to introduce a range of regulatory improvements to encourage more diversified asset allocation.