South Korea's retirement pension plans grew in the first half of this year as large firms continued to seek a shift from lump-sum severance payments to retirement plans, the financial watchdog said Monday.

Contributions to retirement plans totaled 53.9 trillion won (47. 47 billion U.S. dollars) as of the end of June, up 4 trillion won from six months earlier, according to the Financial Supervisory Service (FSC).

The country's pension plans continued to grow in the first half, but the pace of growth in contributions slowed to 8.1 percent in the first six months of 2012 from 25.5 percent in the corresponding period of 2011.

Large companies kept their shift from lump-sum severance payments to retirement plans, contributing to the persistent rise in total retirement pension contributions, according to the FSC. As much as 77.9 percent of large firms with more than 500 employees adopted retirement plans, while little small- and mid- sized enterprises (SMEs) introduced pension plans.

The watchdog said that 97.9 percent of retirees with the age of over 55 received lump-sum benefits to cover the cost of living, but it stressed the shift to retirement plans would increase down the road as the revised tax bill will provide more tax advantages for pension plans than lump-sum severance pays.

By sector, banks held 26.7 trillion won in contributions to retirement plans as of end-June, followed by life insurers with 13. 2 trillion won, securities firms with 9.9 trillion won and non- life insurers with 4 trillion won each.

By product type, products that guarantee principal and interest accounted for 93.9 percent of the total at the end of June, indicating that potential pensioners prefer stable returns.

The FSC, however, noted that preference for non-principal protected products was expected to increase down the road, saying that defined contribution (DC) plans and individual retirement accounts (IRA) were allowed to invest in stock funds and hybrid funds within 40 percent of contributions.