Households beef up nonbank assets

Pension funds and insurances in the financial assets of households broke the 30-percent mark for the first time as households diversified their portfolio amid low rates and rapid aging, data showed Monday.

Pension and insurance assets for households totaled 814 trillion won ($759 billion) last year, accounting for 30.9 percent of their overall financial assets, according to the data by the central bank. The portion has been climbing since reaching 21.7 percent in 2003.

The latest data compiled in June showed that assets in cash and savings deposits accounted for 43.4 percent. Pension funds and insurances came next with 31.3 percent, followed by stock holdings at 19.4 percent and bonds at 5 percent.

Market watchers said the rise in the portion for pension funds, insurances and bonds come as a growing number of people are planning their post-retirement lives in a fast-aging society.

“Since South Korea is in the early stages of aging, the portion of pension funds and insurances is likely to rise further.

Long-term investments in the stock market will also settle down,”

said Seo Dong-phil, an analyst at Woori Investment & Securities.

Market watchers also credited the low interest rate to a fall in a portion of savings deposits. South Korea‘s interest rate has been on a decline in line with the central bank’s rate cuts.

The country‘s base rate currently stands at a record-low of 2 percent following two quarter percentage point cuts in August and October each. (Yonhap)