What happens to the money in a Korean DC retirement pension or IRP if you never choose how to invest it? The Employee Retirement Benefit Security Act says it is then invested in a method set in advance — the pre-designated investment scheme, usually called the “default option” (Act Art. 2 items 15–16, added 11 January 2022). If you have not chosen when you join, or 4 weeks after a product you picked has matured, the provider sends a notice; if you still do not choose within 2 weeks of the notice, the default option applies. The calculator below shows the date it starts.
1. When you join, or 4 weeks after your chosen product ends, the provider must notify you if you have not chosen (Art. 21-3(3)).
2. No choice within 2 weeks of the notice and your money goes into the default option, treated as your own choice (Art. 21-3(4)).
3. You can switch out at any time (Art. 21-3(5)), and the same rules apply to IRPs (Art. 24(4)).
Calculator
Updates as you type. “2 weeks” and “4 weeks” are counted from the day after (our count: 14 and 28 days). Weekends and holidays are not adjusted. The date assumes you choose nothing yourself.
From notice to automatic investment — Art. 21-3
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Information (1) | The provider must give members the default option’s asset allocation and risk–return profile, among other things | Details in Decree Art. 13-2, below |
| Your pick (2) | Each member selects one default option for themselves. If choosing only fund types (item 2), it must include sub-item (a) or (b) | Choosing in advance |
| Notice (3) | If you have not chosen when you join the DC plan, or 4 weeks after the end date of the method you chose, the provider notifies you | An expired deposit left alone is this case |
| Automatic investment (4) | No choice within 2 weeks of the notice: the money is invested in the default option and you are treated as having chosen it | The calculator’s date |
| Switch any time (5) | Members in the default option may at any time choose their own method under Art. 21(1) | Art. 21(1): you may change at least once every half-year |
| Provider changes (6) | With ministerial approval the provider may change the default option and move money after notice | Dates in Decree Art. 13-4 |
The notice’s contents are set too. Decree Article 13-3 requires it to say that the money will go into the default option if you do not choose within 2 weeks, to give the option’s details, and to say that you can choose your own method at any time, sent by post, in writing, online or another agreed way.
What a default option can hold — Art. 21-2(1)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Item 1 | A type where principal and interest are guaranteed | A guaranteed type can be a default option |
| Item 2(a) | A target date is set and the share of lower-risk assets rises over time | Reads like what is commonly called a TDF (our gloss) |
| Item 2(b) | Spread across assets of different risk with periodic rebalancing for long-term growth | Reads like a balanced fund (our gloss) |
| Item 2(c) | Short-term money market instruments, minimising loss | — |
| Item 2(d) | Public infrastructure projects by the state or local government (Ministry ordinance criteria) | — |
| Item 2(e) | Others set by Presidential Decree | Not checked this time |
The rule that a fund-only pick must include (a) or (b) appears both for members’ selection (Art. 21-3(2)) and for members of firms without a default option (Art. 21-4(1)). Providers need approval from the Minister of Employment and Labor (Art. 21-2(1)) after review by a committee (Art. 21-2(2)). The employer must set the option for the workplace, with the consent of the workers’ representative, in the DC plan rules (Art. 21-2(5)).
Approval criteria and what you must be told — Decree Arts. 13 to 13-6
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Approval (Art. 13) | Seven criteria, such as sensible allocation and a simple strategy, losses within what suits the members, and costs not excessive. Item 7: open for joining at all times and redeemable within 14 days of a request | Details in a Ministry notice |
| Information (Art. 13-2) | Risk grade, loss potential and past returns, fees, deposit protection limit, possible change in risk, approval date, and that and how it may change | Look for these in what you receive (our note) |
| Change (Art. 13-4) | Notice to members within 7 days of approval; unless they pick another method, money can move once 14 days have passed | The calculator’s “provider changed” |
| Disclosure (Art. 13-5) | The Minister publishes amounts, status and returns at least quarterly | — |
| Withdrawal of approval (Art. 13-6) | Mandatory if obtained by deception; members are told, and no exit or transfer fees may be charged (para. 7) | — |
Counting the days — our examples
| Case (our example) | Dates | Worth noting (ours) |
|---|---|---|
| Joined 2 Nov 2026, notice the same day | 2 weeks end 16 Nov → default from 17 Nov | Choose before then and your choice applies |
| Chosen deposit matures 31 Dec 2026 | 4 weeks reached 28 Jan 2027 → notice 29 Jan, so 2 weeks end 12 Feb → from 13 Feb | A later notice means a later date |
| Provider’s change approved 2 Nov 2026 | Notice due by 9 Nov; the new option can apply from 17 Nov | You may pick something else |
“Within 2 weeks”, “4 weeks have passed” and “14 days have passed” are counted from the day after (our count). Go by the dates on your provider’s notice.
DB versus DC is covered in DB vs DC retirement pensions, and what employers must pay into a DC plan in DC employer contribution calculator.
Checklist
- ☐ Does your firm’s DC plan have a default option?
- ☐ Which one did you select (guaranteed or fund)?
- ☐ Note the date 4 weeks after any product matures
- ☐ On a notice, decide within 2 weeks
- ☐ Check risk grade, fees and deposit protection in the information pack
Questions that remain
Do DB plans have a default option?
Article 21-3 speaks of defined-contribution members and Article 24(4) of IRPs. The articles we read say nothing about DB plans (our reading).
Once it is automatic, am I stuck?
No. Article 21-3(5) says members in the default option may choose their own method at any time.
Is my principal guaranteed?
Only if the option is item 1 (guaranteed). Item 2 funds can lose money; the Decree requires loss potential and past returns to be disclosed.
Sources
- Korean law database (law.go.kr) — Employee Retirement Benefit Security Act Arts. 2, 19, 21–21-4, 24 — source (current text, effective 18 September 2026, Act No. 21475; checked 2 November 2026). Definitions (items 15–16), DC rules item 4-2, half-yearly changes and three options, item 1 and item 2(a)–(e), approval and review, workplace set-up with representative consent, information, selection, notice on joining or 4 weeks after maturity, investment after 2 weeks, switching any time, provider changes, IRP application.
- Korean law database — Enforcement Decree Arts. 13–13-6 — source (effective 24 March 2026, Decree No. 36220; checked 2 November 2026). Seven approval criteria (redeemable within 14 days), information items and methods, notice contents, 7-day notice and 14 days after a change, quarterly disclosure, withdrawal and transfer costs.
- Not read. Ministry notices (approval and information details), the Enforcement Rule (presentation, committee), providers’ approved products and return disclosures.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your pension provider — your selected option, notice dates, current investments.
- Your employer — the default option in the DC plan rules.
Written on 2 November 2026. The content is from the source; the glosses are ours.
