Starting in 2028 with workplaces of 100 or more employees, the government will require retirement benefits to be set aside outside the company, and will then widen the scope step by step. For retirement pensions, which mainly rely on individual contracts with financial firms, it will add a fund-type model in which a specialized institution manages the reserves, in order to raise long-term returns as well.
On the 28th at the Seoul Government Complex, the government held a joint meeting of the Economic Ministers' Meeting and the Science and Technology Ministers' Meeting, co-chaired by Deputy Prime Minister and Minister of Finance and Economy Lee Hyung-il and Deputy Prime Minister and Minister of Science and ICT Bae Kyung-hoon. It discussed a "plan to strengthen the functions of retirement pensions" containing these measures.
The core of the plan is expanding the external reserving requirement. Instead of accumulating retirement benefits inside the company as at present, they would be entrusted separately to outside financial institutions and the like. The government plans to apply this first to workplaces with 100 or more employees in 2028 and then gradually widen the scope.
The government explains that keeping retirement benefits separate from company funds and outside the firm allows workers' shares to be protected more reliably even in situations such as management difficulties or bankruptcy.
The introduction of fund-type retirement pensions will also be pursued. Under the current system, the contract type is the mainstream, in which reserves are managed under contracts that workers or companies sign with financial firms. The government plans to introduce a fund type, in which a specialized fund management organization pools and manages the reserves, to raise both the expertise and returns of management. Authorization, management and supervision of fund-type pensions will be handled jointly by the Ministry of Employment and Labor and financial authorities.
Fiduciary responsibility will also grow heavier so that retirement savings are not eroded during management. The criteria for evaluating retirement pension providers will shift from a focus on size to an emphasis on pension functions and returns. For the default option, under which reserves are managed in a predetermined way unless a worker gives separate instructions, the government will push to bring forward the application date.
The government's position is that these measures will improve retirement pension returns, which have long been weak, and make retirement pensions function as an actual source of retirement income. Details will be released after party-government consultations at the National Assembly's Climate, Energy, Environment and Labor Committee on the 29th.