"Don't Be Swayed Even by the '10,000-Point KOSPI'... What Matters More Than Timing Is [Retirement Pension Investment Strategy] ⑦"

Interview with Sang Eun Song, Head of the Pension Group at KB Financial Group

Retirement Pension Assets Should Be Designed Without Regional or Thematic Concentration

Build Volatility Buffers with TDFs or Default Options

Regular Contri

"Pension investment should not be about 'timing the market,' but rather about 'making use of time.' In markets where there are concerns about a peak, the fundamental principle of pension strategy is not timing, but asset allocation."

Sang Eun Song, Head of the Pension Group at KB Securities. Photo by KB Securities

Sang Eun Song, Head of the Pension Group at KB Securities, emphasized this point regarding retirement pension investment strategies in a recent interview with The Asia Business Daily. Song stated, "A strategy that puts everything into one area does not align with the structure of pensions," adding, "Pensions are not a lump-sum product, but long-term investments with periodic contributions."

Song pointed out that, despite the continued strong rally in the stock market this year and forecasts of the '10,000-point KOSPI', the main concern for retirement pension investors should not be whether the market has peaked. He explained, "The core of retirement pension product investment strategy is not about whether we've hit a peak this year, but rather about how to endure and accumulate returns in this environment," adding, "Retirement pension investment is not about avoiding the peaks, but about growing assets as you pass through both highs and lows."

Song highlighted three main principles for retirement pension investment: ▲ asset allocation ▲ establishing buffers to absorb market volatility ▲ maintaining regular contributions and systematic rebalancing. He said, "First, rather than a single bet on domestic equities, it is important to adjust allocations without concentration in any region or theme, by mixing global stocks, bonds, and alternative assets. A portion of the total assets should be structured using Target Date Funds (TDFs) or default options, as these can serve as buffers to absorb market volatility." He continued, "By continuing with regular contributions, you can absorb volatility at market highs, and through periodic rebalancing, move some profits from surging assets into undervalued ones to manage volatility and accumulate long-term returns."

Song noted that recently, retirement pension subscribers have shown a preference for products that enable diversification, agility, and automatic adjustment, such as Exchange-Traded Funds (ETFs) or TDFs. He said, "The ETF balance in KB Securities' individual retirement pension accounts has more than doubled in about a year, and the ETF proportion relative to the total reserves has risen from the 20% range to the low 40% range. In particular, there is a strong preference for products like TDFs or default options, which automatically handle asset allocation and rebalancing without the need to monitor the market directly."

Song stressed the importance of naturally shifting from a 'growth-focused strategy' to a 'preservation and withdrawal strategy' as one ages. He explained, "For those in their 20s and 30s, this is a period of using time as an asset, so it is appropriate to have a relatively high proportion of stocks and equity-type ETFs. In their 40s, it is time to start balancing growth and protection using global stock ETFs, bond-type ETFs, TDFs targeting 2035 to 2045, and neutral default options, ensuring the structure remains stable despite changes in returns. For those in their 50s, the focus should be on preservation, using bond-type and mixed-type ETFs, as well as neutral to conservative default options, to avoid major losses. Starting from the 60s, it becomes a phase of withdrawing funds, so the focus should be on principal-guaranteed products, with only a small portion in performance-based products, simplifying the structure and converting more to cash rather than managing directly." He added, "There is no single correct answer for retirement pensions; the structure should be continually adjusted by age, and ongoing review and management are essential."

Song evaluated that the introduction of the in-kind transfer system for retirement pensions has created a favorable structure for securities firms in the pension market. He said, "Since the launch of in-kind transfers, asset management capability and product competitiveness have become the key standards for moving assets, and securities firms are structurally advantaged as they possess investment product lineups and management infrastructure. The core need of customers transferring their assets is not simply higher interest rates, but an environment where they can directly manage their pensions. Securities firms already have established touchpoints with customers familiar with stock and ETF investments through mobile trading systems (MTS), and the same user experience (UX) can be applied to manage pension accounts in an integrated way."

Song emphasized, "The competitive strength of KB Securities in retirement pensions lies not in the experience of selling pensions, but in accumulating processes that actually enable customers to manage their assets. We have structured ETFs, TDFs, default options, and individual retirement pensions (IRPs) not as separate products, but as part of a single asset management flow, and have implemented this as a real customer experience through our digital platforms and dedicated staff. Pensions are not a financial product that ends with a single guidance session, but an area that requires ongoing review at every stage of life, and I believe it is KB Securities' role to take responsibility for this first."

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