This study addresses a long-standing policy blind spot in Korea’s retirement pension system—namely, the absence of a structured decumulation phase. While the accumulation phase has been the central focus of most domestic pension research, with emphasis on asset management, product design, and return maximization, little attention has been paid to how pension assets are converted into stable retirement income. This study seeks to fill this gap by investigating how decumulation can be institutionalized to better support income security for retirees, particularly by enhancing fiduciary responsibility and adopting structured payout frameworks. One of the primary issues in Korea’s retirement pension system is the high proportion of lump-sum withdrawals at retirement. Despite decades of efforts to promote annuitization, the uptake of life annuities remains minimal. This is partly due to the underdevelopment of the payout phase and the absence of default decumulation pathways or fiduciary oversight during retirement. In contrast to other advanced economies, Korean pension plans lack institutional mechanisms for guiding retirees through complex income planning decisions after retirement. As such, retirees are often left to navigate investment, longevity, and liquidity risks entirely on their own. To explore institutional strategies that can improve the structure and governance of the decumulation phase, the study employs a comparative policy analysis of major pension systems. Specifically, the research examines the experiences of the United Kingdom, the Netherlands, and Australia—three countries that represent different models of decumulation governance. These cases were selected for their advanced policy frameworks in areas such as default drawdown design, collective risk-sharing, and fiduciary protection. In each of these countries, recent reforms have moved away from binary choices between annuities and full drawdowns, and toward hybrid structures that combine longevity protection with investment flexibility. For instance, the UK has introduced “investment pathways” as a default drawdown mechanism, supported by regulatory oversight to ensure product suitability. The Netherlands has transitioned to a collective defined contribution (CDC) framework, where decumulation is based on pooled longevity risk and conditional benefit adjustments. Australia, while maintaining flexibility through its superannuation system, is now moving toward setting a standard retirement income strategy (RIS) for each fund. Across these jurisdictions, fiduciary responsibilities are expanding to include not only asset accumulation but also the adequacy and stability of retirement income. Drawing on these insights, the study evaluates the structural limitations of Korea’s current decumulation landscape. Korea’s retirement pension market is dominated by defined contribution (DC) and corporate defined benefit (DB) plans operating in account-based frameworks. There is no system-wide default payout structure, nor are employers or trustees mandated to provide income guidance post-retirement. The paper analyzes the institutional factors that contribute to this gap, including fragmented plan governance, limited annuity supply, and a lack of fiduciary engagement during decumulation. To develop a practical design model suited for Korea, the study presents an institutional case analysis of the Small and Medium Business Retirement Pension Fund (SMBRPF)—Korea’s first fund-type occupational pension plan. As a centralized, trustee-governed fund with pooled asset management, the SMBRPF represents a unique testbed for integrating fiduciary-driven decumulation strategies. Based on interviews with stakeholders and analysis of fund design features, the study proposes a two-stage payout model for the SMBRPF. The first stage involves a default drawdown strategy offering flexibility within actuarially guided withdrawal limits. The second stage introduces a pooled income payout structure, akin to a tontine or CDC model, for long-term longevity protection. The paper further supports its proposal with a conceptual simulation framework. While a full stochastic simulation is reserved for subsequent research, the paper outlines key parameters to be tested, such as payout sustainability, income volatility, and longevity-adjusted income efficiency across different payout rules. The simulation design is based on the application of national life tables, projected investment returns, and policy-based mortality pooling rules. Policy recommendations include introducing fiduciary obligations for decumulation oversight, adopting standardized payout options as default mechanisms, and enabling collective risk-sharing structures, such as CDCs or longevity pools, within institutional plans. The study emphasizes that pension trustees must not only protect accumulated assets but also ensure that those assets translate into sustainable income streams after retirement. In conclusion, this study contributes to the academic and policy discourse by reframing the decumulation phase as an institutional design problem rather than an individual choice dilemma. It calls for a shift from product-centered approaches to governance-centered models in the Korean retirement pension system. By embedding fiduciary oversight and pooled payout mechanisms into the decumulation phase, the study offers a pathway for transforming Korea’s retirement pensions into a true income security system for an aging population.
