Golden Bridge to Stop Retirement Pension Service

Golden Bridge Investment & Securities informed the government in mid April that it would stop providing the retirement pension service. It is the first time for one of 49 retirement pension providers to quit its service.

A source from the investment firm said Monday, “We notified the Financial Services Commission of our intention to stop providing the relevant service due to decreasing profitability. After obtaining consents from insurers, we transferred the contracts to other financial institutions in early 2008. We compensated for all the losses incurred during that process.”

Financial experts pointed out, “If retirement pension providers either stop their services or go bankrupt, they may do damage to subscribers. However, there’s no effective measure at the moment to prevent providers from stopping their services.” The commission will hold a meeting with the Labor Ministry, in charge of related laws, and discuss measures on how to protect subscribers to retirement pension programs from service suspension, within this month.

Retirement pension is designed to allow financial firms to invest the pension funds based on the decisions of employers or employees, until giving it back to them after retirement. The system was introduced in December 2005 in order to secure the livelihood of the aged, together with the national pension scheme. As of late March, 612,000 subscribers accumulated a total of 3.2 trillion won in retirement pension. The government has argued that workers can receive retirement grants even when their employers go under, only if they subscribe to retirement pension.

Golden Bridge is a small retirement pension provider with 106 million won from 40-50 small businesses as of late last year.

Ryu Geon-shik, a senior researcher of the Korea Insurance Development Institute, pointed out, “The Golden Bridge case has not done serious damage since it is an operating agency. But, if asset management firms that keep the fund and provide retirement pension fees stop their businesses, subscribers could lose their money.”

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