As discussions move into full swing on introducing fund-based retirement pensions, Hana Bank is preparing for system changes based on pension market operating practices in Australia and the UK.

Hana Bank said on Wednesday it visited retirement pension funds, asset managers and others in Australia and the UK last year to review the governance, asset management and member administration systems of fund-based retirement pensions. It visited 10 institutions in Australia and six funds in the UK.

The government is reviewing ways to introduce various funds, including an open model for financial institutions, an alliance model and an open model for public institutions, while running the existing contract-based retirement pension system in parallel with a fund-based system.

Hana Bank said it focused in Australia on long-term diversified investment and performance management systems. Australia views retirement pensions as assets accumulated over a long period and invests not only in stocks and bonds but also diversifies into real estate and infrastructure. The Australian Prudential Regulation Authority (APRA) evaluates performance by fund through a "Performance Test" and takes steps such as demanding improvements or restricting new enrolments for underperforming funds.

In the UK, it examined a structure in which contract-based and fund-based systems compete together and independent fund governance. A "Master Trust," in which multiple workplaces participate in a single fund, is run by an independent trustee board that is responsible for operations and key decision-making. It also operates a "Value for Money" (VfM) system that comprehensively evaluates not only investment performance but also costs and service levels.

Hana Bank is sharing what it confirmed locally with Hana Financial Group affiliates and running a consultative body to discuss the capabilities and response direction needed to introduce fund-based retirement pensions. It is reviewing ways to apply long-term asset management, independent governance, professional management systems, performance evaluation and member administration to Korea’s system.

It is also reflecting the overseas benchmarking in its existing retirement pension business. Hana Bank operates a "Hana MP subscription service," including a robo-adviser discretionary management service and expert portfolios, and is expanding its pension consulting centre, "Pension The Dream Lounge," to regional areas. It also strengthened aftercare, including changing default option products with poor performance.

A Hana Bank official said both Australia and the UK had a common point in that they had continuously supplemented systems and management frameworks to accumulate and professionally manage members' retirement assets over the long term. The official said the bank plans to proactively prepare the capabilities needed in line with the direction of introducing fund-based retirement pensions in Korea.