Gov’t expands eligibility for retirement allowance

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Gov’t expands eligibility for retirement allowance

Entry-level employees who work for less than a year, part-time workers and even interns will be able to receive retirement allowances from 2016, the government announced yesterday.

It is part of a plan to boost private pensions to help retirees have more financially secure lives.

Currently, only employees who work at a company for more than a year are eligible for retirement allowances.

More broadly, the government is pushing to require all companies to have their employees subscribe to private retirement pension schemes by 2022.

To do that, the National Assembly will have to revise the labor law.

“While strengthening national pension schemes, the government saw the need to develop private pensions to help protect the livelihoods of retirees,” said Finance Minister Choi Kyung-hwan at a meeting in Sejong yesterday.

The minister concluded the existing universal pension plan, dubbed National Pension, isn’t enough.

From 2016, the government will mandate private pension schemes for companies with more than 300 employees.

Companies with more than 100 workers will be subject to the plan from 2017.

Currently, employees can choose either lump-sum retirement allowances or monthly payments under a pension scheme.

As of last year, about 4.7 million employees subscribed to private pension products with financial institutions, according to data from the Financial Supervisory Service. The total for all pension funds reached 85.3 trillion won ($84 billion).

The government introduced the private retirement pension system in December 2005.


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