In South Korea, a significant transformation in the retirement benefits system is set to take place, as all businesses operating retirement payment schemes are mandated to switch to funded retirement pensions. This change is designed to eradicate the potential for wage arrears, as funds will be accumulated outside the company. Because of this transition, a new landscape of retirement pension management is emerging, where large amounts of retirement savings from various companies can be consolidated and actively managed. Such a scenario is expected to improve investment returns due to the increased funds managed by these retirement pension operators, similar to trends seen in other countries.

The conversation around the future of retirement pensions highlights that the retirement payment system is nearing extinction, with 73.6% of companies expected to make the switch to funded pensions by the end of 2024. Larger corporations have already adopted retirement pensions at a rate exceeding 90%, while smaller companies with less than 300 employees remain the primary group not yet transitioned. This shift aims not only to secure workers' retirements but also to prevent potential wage defaults, which currently represent a significant portion of all wage arrears in the nation.

Furthermore, the article introduces the concept of pooled funded retirement pensions, where funds from multiple companies are managed centrally by financial institutions. This innovative approach could potentially lead to better financial outcomes and operational strategies. However, restrictions apply, as only small enterprises can utilize certain models of this pooled fund. The implications of these adjustments are vast, signalling a potentially revolutionary shift in how retirement funds are managed in South Korea, with the possibility of the National Pension Service becoming involved in new operational models yet to be decided.