By Kim Jae-won
Korea Investment & Securities says that consumers can well prepare for their retirement with the brokerage’s pension savings product which provides tax deductions.
The product titled “Korea Investment Gold Plan Pension Securities Transferrable 1” is a long-term installment fund which requires at least 10 years of contract. People can get pension payment after the age of 55.
A tax deduction is one of the biggest benefits of the product. For pension-related funds, the tax agency provides 100 percent tax deduction on up to 4 million won of investment per year.
As Korea is entering an aging society, experts recommend people buy private pension products to brace for life on retirement as the country’s national fund does not provide sufficient funds. According to a recent survey, pensions from the National Pension Service covers only half of expenses after retirement.
If a retiree needs 2 million won per month for two decades after retirement, the whole amount reaches around 500 million won. Korea Investment says that safe assets such as term deposits and bonds-style funds cannot increase assets in the time of low-interest rates. Those aging 18 or more are eligible to buy the product.
Consumers need to note that the government imposes 5.5 percent income tax on pensions and they should pay 22 percent of income tax when they withdraw the money before the contract expires.
Korea Investment says that the fund focuses on underestimated stocks and companies which can maximize returns. It also makes investment based on long-term portfolio seeking steady returns.
The company invests 70 percent of funds in leading companies in each industry and uses the other 30 percent in high-risk, high-return stocks. The fund is also transferable to other type of funds, such as pension securities of sovereign and public bonds without fees.
"It is essential to buy additional private pension savings in the time of an aging society and low-interest rates," said Park Jin-hwan, a manager of Korea Investment in a statement. Park added that the fund is a good choice for tax deduction.
For more information, stop by the company's branches, visit its website of www.truefriend.com, or call 1544-5000 and 1588-0012.