The National Pension Service said on the 15th that it has expressed an opinion to take part in the "fund-type retirement pension" market only for public institutions, which account for 0.2% of all business sites. A fund-type retirement pension is a system in which severance pay is not paid in a lump sum but is paid in the form of a pension through partitioning. During the payment period, financial institutions and others would manage the retirement pension and grow it.
According to the Ministry of Employment and Labor (MOEL) and others that day, the National Pension Service recently drew up and submitted a proposal to join the fund-type retirement pension market to the "labor-management-government task force (TF) to strengthen retirement pension functions." The proposal reportedly says the National Pension Service would participate as a provider only for fund-type retirement pensions of public institutions. In consideration of backlash from existing retirement pension providers such as banks and securities firms, the scope of management appears to have been limited to some business sites rather than all business sites.
However, banks and securities firms are also said to have pushed back against this. By number of business sites, public institutions account for only 0.2% (342) of all establishments with at least one employee in Korea (about 1.86 million), but in terms of amount, the share is presumed to be significant. Since severance pay continues to accumulate, it is difficult to calculate the exact amount. Still, public institutions have higher salaries than the overall average and longer tenures, so they are classified as "prime accounts."
In this regard, the labor-management-government TF plans to collect stakeholders' opinions and design the detailed system by next month.
Meanwhile, if a retiree applies to receive severance pay as a lump sum, they can receive the entire amount at once even if a fund-type retirement pension is introduced.