Politics · South Korea · 2 hrs ago
South Korea plans mandatory external retirement savings by 2030
South Korea plans to require businesses to set aside retirement benefits outside the company so workers are less likely to lose them if an employer cannot pay.
The requirement would start in 2028 for businesses with 100 or more employees, extend to those with 10 to 99 employees in 2029, and reach smaller businesses in 2030.
The plan responds to unpaid wages: retirement benefits made up 41.1% of companies’ unpaid wage total last year.
The government also wants to expand pooled retirement funds, which combine savings from multiple workplaces for professional investment.
Workers with certain pension accounts could also have more investment choices, and the limit on risky investments in individual retirement accounts would rise gradually.
The proposal would make pension payments the default at retirement unless workers specifically choose a lump sum.
The government plans to complete a bill in November and seek its passage by the end of the year.
South Korea plans to require all businesses to set aside retirement benefits outside the company by 2030.
The requirement would start in 2028 for businesses with at least 100 employees, extend in 2029 to those with 10 to 99 employees, and cover businesses with fewer than 10 employees in 2030.
The government also plans to expand pooled retirement funds, allowing private financial institutions to manage assets from multiple businesses.
The measures are intended to reduce unpaid retirement benefits and improve retirement savings returns and workers’ retirement income.
The government plans to complete a bill next month and seek passage by the National Assembly within the year.
- Who
- South Korea’s government and ruling-party lawmakers are advancing the plan.
- What
- Businesses will be required to set aside retirement benefits outside the company in stages by 2030.
- When
- The phased requirement begins in 2028 and reaches businesses with fewer than 10 employees in 2030.
- Where
- South Korea.
- Why
- To prevent unpaid retirement benefits and strengthen retirement savings and workers’ retirement income.
This story does not have two clearly opposing sides.
A labor-management-government task force announced a joint declaration on strengthening retirement pensions.
The government and ruling-party lawmakers discussed and announced the retirement pension strengthening plan.
The government plans to complete a bill to amend the Employee Retirement Benefit Security Act.
The government plans to seek passage of the bill by the National Assembly.
The outside-funding requirement is scheduled to begin for businesses with at least 100 employees.
The requirement is scheduled to extend to businesses with 10 to 99 employees in 2029 and those with fewer than 10 employees in 2030.
- First phase
- 2028; businesses with at least 100 employees
- Second phase
- 2029; businesses with 10 to 99 employees
- Final phase
- 2030; businesses with fewer than 10 employees
- IRP risk-asset limit
- Currently 70%; the government plans to raise it gradually
- Wage arrears
- Retirement benefits made up 41.1% of company wage arrears last year
5 sources
What people are saying
The retirement pension strengthening plan is the result of a social agreement reached together by labor, management and the government.
We will build a comprehensive on-site support system in line with the mandatory implementation schedule.