Korea Federation of Small and Medium Enterprises said that starting on the 1st, it will overhaul the payment system for Yellow Umbrella, a mutual aid savings scheme for small businesses and self-employed workers, and raise the rate applied when paying out mutual aid benefits.
KBIZ revamped the payment system in line with the revision of the Enforcement Decree of the Act on Restriction on Special Cases Concerning Taxation. The previous maximum monthly contribution limit of 1 million won (300 million won per quarter) was raised to a maximum of 1.5 million won per month (18 million won per year). The expanded payment limit is expected to strengthen small business owners' asset building and retirement preparation functions.
After the overhaul, additional payments can be made freely within the annual limit. The timing of payments can be adjusted to fit business conditions and income. For example, even if someone newly enrolls in Yellow Umbrella in Dec., they can pay up to 18 million won in the month they join and receive an income tax deduction for that year. If a certain amount is prepaid at the beginning of the year and the annual limit has not been reached, additional payments are possible within the remaining limit.
The payout interest rate for mutual aid benefits will also be raised. Starting in the third quarter this year, when receiving benefits due to old age and other reasons, the applied rate will increase by 0.2 percentage points, from 3.2% in the second quarter to 3.4%. For members receiving benefits due to business closure or death, a rate of 3.7%—0.3 percentage points higher than the old-age benefit rate—will be applied.
Yellow Umbrella is a mutual aid program designed to support the livelihood stability and recovery of small businesses and self-employed workers in preparation for management crises such as business closure or old age. As of June this year, the number of enrolled members exceeded 1.9 million.
Members can receive income tax deductions of up to 6 million won per year. Compound interest on an annual basis is applied to the principal paid in. By law, the benefits are protected from seizure, allowing them to be used as livelihood stabilization funds even in times of crisis.
KBIZ will also run an online enrollment event for the month of July. Those who newly enroll through the Yellow Umbrella website or mobile app by the 30th will receive a mobile coupon worth 50,000 won. The coupon can be selected and used with either Naver Pay or Kakao Pay, depending on preference.