U.S. Retirement Funds Open to Cryptocurrency, Blocked by Korea’s ‘30% Safe Asset Rule’

U.S. Allows Investments in Gold, Private Equity, and Infrastructure

Guaranteeing Employee Choice and Diversity

Korea Unable to Take Initiative Even With New Products

The United States is supplementing its pension policies to increase retirement plan returns and guarantee investor choice. In addition to implementing an auto-enrollment system for defined contribution (DC) retirement plans such as the 401(k), the U.S. is considering allowing cryptocurrency investments—including Bitcoin—within pension plans.

Through the 'SECURE 2.0 Act,' which took effect this year, the U.S. further strengthened its retirement security. Employees are now automatically enrolled in a 401(k) plan unless they actively refuse. This policy applies to employees at companies that adopted the 401(k) system after 2022. Previously, workers had to decide whether to enroll after starting their jobs. This change aims to bring employees who were eligible but did not participate into the system. From this year, even part-time workers previously ineligible can join retirement plans if they work more than 500 hours per year for two consecutive years.

There is a strong possibility that plans allowing investments in cryptocurrencies such as Bitcoin within retirement accounts will also be launched. The consensus among local finance industry experts is that relevant agencies—including the Department of Labor, Securities and Exchange Commission (SEC), and the Federal Retirement Thrift Investment Board—will soon permit cryptocurrency investments in retirement plans.

It is also anticipated that new administrative orders will relax 401(k) regulations to allow a wider variety of alternative assets, including not just cryptocurrencies but also gold, private equity, and infrastructure. These measures are intended to broaden investment choices for participants and enhance profitability. Sarah Holden, Senior Director of Investment and Retirement Research at the Investment Company Institute (ICI), commented, "Guaranteeing investment options and diversity is the key to the success of U.S. retirement systems," adding, "The system was designed to strengthen security, but instead of mandating participation, it relies on gentle intervention (nudging) as a principle."

In contrast, South Korea imposes strict limits on the operation of pension funds. Policies require that at least 30% of assets be invested in safe assets, such as bonds. Investments in certain products, including principal-guaranteed notes, are also restricted. Rather than a ‘negative list’ (allowing all but explicitly prohibited products), Korea uses a ‘positive list’ approach, specifying only a few permitted investment products. Consequently, even if new products appear, pension fund investments are virtually blocked unless regulations are amended.

New York = Suji Na, Reporter suji@hankyung.com