"Why Is the Amount in My Account So Low?"... Why Pension Savings Subscribers Were Surprised

After maintaining a pension savings insurance policy for more than 20 years, Person A was surprised to find that the pension payments were lower than expected. The rate applied when the policy was taken out was 11.25%, but the actual rate applied was 4.00%. Person A filed a complaint with the Financial Supervisory Service over the rate being lower than the one stated in the policy illustration.

On October 21, the Financial Supervisory Service issued consumer guidance for pension savings subscribers to help prevent similar disputes.

The pension amount presented before taking out a pension savings insurance policy may not be guaranteed. This is because the figures in the policy illustration are mostly based on the rate applied when the policy is taken out. For interest rate-linked pension savings insurance, the pension amount may change as the applied rate fluctuates after enrollment. With participating pension savings insurance, the amount of dividends may also differ from the estimate depending on the insurance company's business performance.

Consumers should also be aware that making an early withdrawal from a pension savings account may result in a loss. Early withdrawals are subject to a 16.5% tax on other income, which may reduce the surrender value. In cases where an early withdrawal is unavoidable, a pension income tax of 3.3% to 5.5% may apply instead of the tax on other income. However, this is allowed only if supporting documents are submitted to the financial company within six months of the date on which the reason for the withdrawal, such as a natural disaster or the subscriber's death, is confirmed.

The pension payments received may also change after payments begin. If the fixed-term payment option is selected, the pension amount may decrease depending on the insurance rate applied and the fund's return. In addition, the balance in a pension savings account can be classified as tax-exempt amounts, deferred retirement income, and taxable income. Different tax rules apply to each category, which may affect the amount received.

Consumers should also be aware that transfers between pension savings accounts may be restricted. When changing a pension account, using the account transfer system avoids penalties such as the tax on other income that may apply to early withdrawals. However, transfers may be restricted if certain conditions apply. These include receiving pension payments, receiving a lifetime annuity, or having an account subject to seizure or provisional seizure.

This content was produced with the assistance of AI translation services.