The country’s private pension market is on course to expand by about 34 percent this year as more are joining the retirement market in one of the world’s fastest-aging societies, industry sources said Monday.

The retirement and personal pension market is forecast to exceed 250 trillion won ($218 billion) by the end of this year, up from 187 trillion won last year, sources said.

The flock to the pension market comes as Korea is fast becoming an aged society, as senior citizens aged 65 or older are forecast to increase by 5 percent in just six years. Korea Statistics expects the ratio to grow to 14.3 percent by the end of 2018, from the current 11 percent, and rise further to 20 percent in 2026.

Funds gathered in the private pension market have been failing to generate stable returns for subscribers flocking to secure their life after retirement. Pension products offered by commercial banks have generated a mere 2 percent return on average this year. Retirement pension returned just around 1 percent this year and some even lost money from aggressive stock investments after the eurozone crisis caused the local market to tumble in the past few months. Adjusted for inflation, the rate of return at private pension funds is logging negative returns on average. Seoul expects annual inflation to come in at an average of 4 percent this year.

By Cynthia J. Kim (cynthiak@heraldcorp.com)