It was learned on the 12th that the Ministry of Employment and Labor (MOEL) has launched a fact-finding survey on the additional expense and administrative burden that would arise if small and midsize corporations are required to externally fund retirement benefits. Externally funding retirement benefits means corporations entrust employees' severance pay to financial institutions such as banks. The aim is to ensure workers' retirement benefits are protected even if a corporation goes bankrupt.
Earlier, the ministry decided to mandate external funding of retirement benefits after a meeting of the "labor-management-government task force (TF) to strengthen the functions of retirement pensions." However, details such as when the system will be implemented have not yet been set.
Based on the survey results, the ministry plans to draft a bill to mandate external funding of retirement benefits and submit it to the National Assembly in the second half. The ministry also plans to review providing fiscal support for fees paid by small business sites when entrusting retirement benefits to financial institutions. The fee is said to average 40 bp a year (1 bp=0.01%). That amounts to 4 million won per 1 billion won.
The ministry is also reviewing a plan to provide tax benefits to establishments that introduce external funding of retirement benefits. It also plans to set appropriate grace periods by establishment size.