"Relocating Mutual Aid Associations to Regional Areas Could Cause 8.5886 Trillion Won in Losses Over 10 Years... Not Economically Viable"

Korea Policy Evaluation Institute Analysis
"Members Face a 1.13-Percentage-Point Annual Loss in Interest"

A study has found that relocating five mutual aid associations for teachers and education staff, civil servants, military personnel, police officers, and firefighters to regional areas could result in losses of 8.5886 trillion won over 10 years. The analysis found that relocation would entail costs for moving offices and IT systems and increase operating expenses. It would also reduce returns on alternative investments by distancing the associations from Seoul’s financial networks and pool of skilled professionals.

On November 10, the Korea Policy Evaluation Institute (KIPE) released the findings of its study, titled “Feasibility Analysis of Relocating Mutual Aid Institutions to Regional Areas,” which assessed the economic feasibility of relocating the five associations. Founded in 2002, KIPE is a private research institute that conducts performance evaluations and policy research for the government, local governments, and public institutions.

A researcher with the Korea Institute for Policy Evaluation is presenting the findings of a feasibility study on relocating mutual aid associations to regional areas. Mutual Aid Association Labor Union Council

The institute said that the 8.5886 trillion won in losses would be equivalent to a 1.13-percentage-point reduction in members’ annual retirement benefit rate. In other words, the amount could otherwise be used to pay members an additional 1.13 percentage points in interest each year for 10 years. However, this loss figure is not an empirical estimate; it is based on a stress scenario devised by the institute, an analytical method that assesses impacts under unfavorable assumptions.

Mutual aid associations are institutions that provide mutual support and are funded by contributions from members, such as civil servants and teachers, as well as investment returns. The institute said that, because they receive no government funding, a decline in returns would reduce member benefits, and there are no mandatory provisions requiring the government to cover losses with public funds.

"Alternative Investments Account for 61.50%... National Pension Service Sees Higher Turnover"

The researcher said that relocating the five major mutual aid associations to regional areas is expected to result in losses of more than 8 trillion won over 10 years. Mutual Aid Association Labor Union Council

The institute focused on the associations’ asset management structure. As of 2025, alternative investments accounted for 61.50% of the five associations’ total assets, about four times the share at the National Pension Fund (15.95%).

The institute said that alternative investments depend on identifying investment opportunities; obtaining information through networks with asset managers and financial institutions; conducting due diligence and negotiating with investment targets; and making decisions quickly. It described Seoul, where financial institutions, asset management firms, accounting firms, law firms, and advisory firms are concentrated, as an important part of the infrastructure for managing the associations’ assets.

The institute also analyzed cases involving public institutions. According to its research, after the National Pension Service relocated to Jeonju in 2015, the turnover rate among investment staff rose from 5.6% to 14%, and 107 investment professionals left over the three years after the relocation became imminent. The competition ratio for fund management positions fell from 32 applicants per opening in 2014 to 3.6 in 2025. After reviewing previous studies, the institute found that relocation had lowered returns on overseas alternative investments by 9.5 percentage points compared with the benchmark.

In a survey of mutual aid association employees, 95.2% said they opposed relocation to regional areas, while 71.1% said they would consider changing jobs if the associations relocated. The task respondents expected to become most difficult after relocation was obtaining investment information and maintaining financial networks (70.7%).

"Members Will Ultimately Bear the Costs... Relocation to Regional Areas Requires Careful Review"

Alternative investments account for 61.5% of mutual aid association assets, about four times the share at the National Pension Service. Mutual Aid Association Labor Union Council

A mutual aid association official said, "The burden of relocation costs, higher operating expenses, and lower returns on asset management resulting from relocation will ultimately fall on members." The official added, "Unlike pension plans, mutual aid associations are voluntary institutions funded by members who choose to join and make contributions. If lower returns become a reality, members’ trust could erode, and the possibility of outcomes such as mass withdrawals cannot be ruled out."

The official also said, "Given not only the financial losses members would have to bear, but also the damage to institutional sustainability that could result from mass withdrawals, as well as the social conflict and policy costs that could arise during the relocation process, the feasibility and practicality of relocating mutual aid associations to regional areas should be carefully considered."

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