Mirae Asset: "Individual Savings Government Bonds Now Available for Investment in Retirement Pension Accounts Starting September"

Mirae Asset Securities Launches September Bond Subscription
Significant Increase in Long-Term Issuance to Accommodate Retirement Pension Accounts

Mirae Asset Securities announced on September 9 that it will hold subscriptions for Individual Savings Government Bonds for five business days from September 9 to September 15. Starting this month, in addition to the existing dedicated accounts, investors can also invest in Individual Savings Government Bonds through Defined Contribution (DC) and Individual Retirement Pension (IRP) accounts.

Subscriptions can be made at Mirae Asset Securities branches nationwide and through its Mobile Trading System (MTS) between 9:00 a.m. and 4:00 p.m. Customers with DC or IRP accounts can subscribe through the retirement pension products section within the MTS.

The total issuance for September is KRW 23 billion. By each type: KRW 2 billion in 3-year coupon bonds, KRW 3 billion in 3-year compound interest bonds, KRW 5 billion in 5-year bonds, KRW 11 billion in 10-year bonds, and KRW 6.5 billion in 20-year bonds.

The key feature of this issuance is that 10-year and 20-year Individual Savings Government Bonds can now be included in retirement pension accounts. This change addresses the needs of retirement pension customers who are seeking long-term investment products. Enrollment via retirement pension accounts is possible only during this September subscription period.

The total issuance volume has increased by KRW 8 billion compared to the previous month, with significant expansions in the quantities of 10-year and 20-year bonds to actively reflect demand for long-term investing.

The additional interest rates are: 0% for 3-year bonds, 0.1% for 5-year bonds, and 0.35% for both 10-year and 20-year bonds. Accordingly, if held to maturity, the pre-tax returns will be: 11.3% for 3-year coupon bonds (average annual 3.8%), 11.8% for 3-year compound interest bonds (average annual 3.9%), 22.8% for 5-year bonds (average annual 4.6%), 59.3% for 10-year bonds (average annual 5.9%), and 161.8% for 20-year bonds (average annual 8.1%).

Mirae Asset Securities stated that interest in Individual Savings Government Bonds among investors continues to be strong. As of August this year, the cumulative subscription amount for Individual Savings Government Bonds through Mirae Asset Securities, which serves as the sole sales agent, reached approximately KRW 2.29 trillion. Given that the total offering amount was KRW 1.4 trillion, the average competition ratio stood at 1.62 to 1. This indicates sustained demand for stable, long-term investment amid market volatility.

Individual Savings Government Bonds are savings-type government bonds issued by the government for individual investors. They offer the stability of principal protection, and if held to maturity, investors benefit from the additional interest rate and, for compound interest bonds, the annual compounding of interest. In dedicated accounts, a separate taxation benefit applies to up to KRW 200 million of purchase (for bonds with maturities of five years or longer). In retirement pension accounts, taxation is deferred during the investment period, and when the funds are eventually received as a pension, a low pension income tax rate is applied, depending on relevant requirements. Accordingly, investors can utilize both dedicated and retirement pension accounts in a "two-track" investment strategy tailored to their investment horizon and fund characteristics.

An official from Mirae Asset Securities commented, "With this institutional change, Individual Savings Government Bonds are expected to establish themselves as a new long-term investment alternative that can utilize 30% of the conservative asset portfolio in retirement pension accounts," adding, "Since customer interest in the comparatively short 5-year bonds is high in dedicated accounts, both retirement pension and dedicated accounts can meet the unique investment needs of each customer group."

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