To Avoid a 'Tax Bomb,' Understand Personal Pensions Before Subscribing… Shuka World Dissects Pension Savings Products

Shuka mentioned that Japan is the only major country in the world that has not switched its monetary policy to tightening and continues to maintain an expansionary stance, releasing money. He explained that due to this policy stance, there is still a positive outlook on the Japanese economy.

News broke that Hanjin Heavy Industries was facing delisting due to the aftermath of its failed investment in the Subic shipyard in the Philippines. It is analyzed that the deteriorating management situation of the shipyard since late last year has severely impacted the financial health of the entire company.

Hanjin Heavy Industries recorded massive losses and is at risk of falling into capital impairment. Shuka diagnosed that if a company of Hanjin Heavy Industries' stature incurs 600 billion won in losses, capital impairment will worsen, which could lead to it being designated as a delisting review target, a serious situation.

In the management rights dispute surrounding Korean Air, activist funds and the National Pension Service are demanding that the owner-management relinquish control. While the property rights of an owner cannot be directly infringed upon in a capitalist society, the deprivation of management rights is considered a possible scenario.

The government has confirmed plans to open KEPCO University in Naju in 2022. Along with this, it is expected to offer unprecedented generous support conditions such as a 1 billion won annual salary for the president, 400 million won for professors, tuition exemption, and dormitory provision for all students, to attract talent.

Shuka relayed that Professor Kim Hyun-chul advised people in their 50s and 60s to seek new opportunities in the ASEAN region instead of posting harsh comments on social media. He also reportedly told young people to experience a 'Happy Korea' in the challenging environment of ASEAN rather than criticizing Korea as 'Hell Joseon'.

Shuka mentioned that Professor Kim Hyun-chul suggested that if it's difficult to find employment after graduating with a Korean literature degree in Korea, one should go to Thailand or Indonesia to teach Korean. This statement is interpreted as implying that one can work abroad and be respected.

Shuka conveyed that Professor Kim Hyun-chul questioned why restaurants in Korea, the world's 7th largest economy, only compete domestically, referring to the difficulties faced by small business owners. He argued that the domestic market will collapse due to the low birthrate, so there is no future in operating a restaurant in Korea, and one should expand into Southeast Asian markets such as Vietnam, Japan, and Thailand.

Shuka pointed out that while Professor Kim Hyun-chul's remarks were well-intentioned and showed a willingness to solve problems, his harsh way of expressing them, which did not consider the other party's perspective, was bound to backfire. He emphasized that the same words can evoke different levels of empathy depending on how they are delivered.

Shuka warned that if North Korea were to distribute a large number of counterfeit 100-dollar bills, it would cause enormous market disruption. He stressed that if counterfeit currency indistinguishable from real dollars were to be circulated, it could become a major problem for Korean society, urging viewers to be vigilant.

Statistics were released indicating that South Korea's financial literacy level is below the OECD average. Shuka analyzed the meaning of those watching his broadcast in this situation, posing a paradoxical question: do they come to watch because financial literacy is low, or would those with low financial literacy not watch such a broadcast at all?

According to a survey of wealthy individuals, clothing, miscellaneous goods, and dining out were high on the list of items where future spending would be reduced. Shuka analyzed that this suggests businesses in these sectors, excluding the high-end market, may face difficulties, adding that nearly 40% of respondents said they would reduce spending on these items.

Interestingly, private education expenses for children ranked 3rd in both categories for the wealthy: items they would increase spending on and items they would decrease spending on. Shuka interpreted this result as clearly demonstrating the wealthy's love-hate relationship and internal conflict regarding their children's education. It seems to reflect a dual desire to spend money but also to reduce it.

Items that the wealthy are expected to increase spending on in the future were culture/leisure and medical/health. Shuka analyzed that this indicates a growing interest in 'having fun and being less sick.' It appears to reflect a willingness to increase investment in leisure activities and health management.

According to a survey of wealthy individuals, 34% of respondents reported receiving inheritance or gifts in their 30s. Including those in their 20s, this figure reached an impressive 45%, revealing that nearly half of wealth is transferred before the age of 40. This suggests that early wealth accumulation is one of the significant pathways to becoming wealthy.

A report indicated that while those in their 30s have a high willingness to purchase personal pension products, their low awareness of the products themselves prevents them from subscribing. Shuka explained that consumers are caught in a dilemma where they recognize the need for personal pensions but struggle because they don't know which product to choose or how to subscribe.

According to a survey, the ideal monthly living expenses for retirement that people envision are around 3 million to 3.2 million won. However, even with both national and corporate pensions, there is a shortage of about 1.5 million won per month. This highlights the need for additional retirement preparations, such as personal pensions.

Shuka pointed out that many people mistakenly believe they have a personal pension when they actually hold DC or DB type retirement pensions. He clarified that these are retirement pensions operated as part of severance pay and are distinct financial products from personal pensions, emphasizing the need for clear differentiation.

Shuka warned that while tax credit products offer the benefit of receiving back a portion of the taxes paid each year, if terminated prematurely, a huge amount of tax will be levied. He emphasized that situations requiring additional payments of millions, or even over ten million won, can arise, so it's crucial to approach tax credit products with a long-term plan and carefully.

Shuka explained variable life insurance, clearly stating that it is a non-taxable product, not a tax-deductible one, which many people confuse. He emphasized that due to the nature of insurance products that do not use the term 'savings,' they are not eligible for tax deductions; instead, they can receive non-taxable benefits if specific conditions are met.

Shuka explained that pension insurance and other savings products are fundamentally similar but differ in how fees are calculated. He added that insurance products include unique coverage features such as death benefits, and these differences are reflected in the fee structure.

Shuka pointed out that the subscription rate for personal pension products was high until 2016, but it sharply dropped in that year as non-taxable benefits were significantly reduced. This example illustrates that tax benefits have a very significant impact on the choice of financial products.

Shuka explained that China is pursuing the establishment of a 'social credit system' to assign levels to all individuals and businesses by 2020. This system is not just a plan but has been underway since 2014 and is expected to expand nationwide by 2020, thanks to technological advancements. This demonstrates the Chinese government's intention to integrate and manage all personal information.

Shuka stated that China is pursuing the database creation and linking of personal information for all its citizens by 2020. He expressed surprise that a system typically seen in future societies would become a reality as early as next year. China's extensive information collection and management policies are attracting global attention.

The explanation states that China's social credit system goes beyond simple financial credit assessment. It builds credit information and infrastructure based on legal regulations, ethical charters, etc., encompassing almost all personal information. Everything from comment content, fines, parking violations, school grades, and more, is integrated and linked to an individual's credit score. Once this system is implemented, individuals will receive scores in government, commercial, social, and judicial sectors.

The Chinese government has authorized 8 companies, including Alibaba led by Jack Ma and Tencent, to independently operate their credit assessment systems with state approval. Systems like Alibaba's 'Sesame Credit' are already conducting credit assessments with state permission, demonstrating that private companies are playing a crucial role in building the social credit system.