EMPLOYEE RETIREMENT BENEFIT SECURITY ACT [See entire ACT]

CHAPTER Ⅳ Defined Contribution Retirement Pension Plan

Article 19 (Establishment of Defined Contribution Plans)

(1) Any employer who intends to establish a defined contribution plan shall prepare rules for defined contribution plan containing the following matters with the consent of, or after seeking opinions from, the representatives of employees pursuant to Article 4 (3) or 5 and shall report such rules to the Minister of Employment and Labor:

1. Matters concerning the allocation of contributions;

2. Matters concerning the payment of contributions;

3. Matters concerning the operation of reserves;

4. Matters concerning the methods of operating reserves, supply of information, etc.;

5. Matters concerning early withdrawal;

6. Matters relating to subparagraphs 1 through 3 and 6 through 10 of Article 13;

7. Other matters prescribed by Presidential Decree as necessary to operate the defined contribution plan.

(2) Where a defined contribution plan is established under paragraph (1), Article 14 shall apply mutatis mutandis to the period of contribution, Article 17 (1), (4) and (5) to the types of benefits, eligibility requirements for recipients and the procedures for and methods of paying benefits, and Article 18 to the notification of current status of operation. In such cases, "subparagraph 3 of Article 13" in Article 14 (1) shall be construed as "subparagraph 6 of Article 19, and "defined benefit plan" in Article 17 (1) as "defined contribution plan".

Enforcement Ordinance

Article 10 (Matters to be Stipulated in Defined Contribution Retirement Pension Rules)

(1) “Matters prescribed by the Presidential Decree” in Article 19 (1) 7 of the Act means the following matters:
1. Matters regarding the payment of fees for carrying out operational management services and asset management services;
2. Matters regarding the methods and procedures for educating pension holders, etc.
(2) The fees under paragraph (1) 1 shall be borne by the employer:Provided that fees incurred due to additional contributions which is stipulated to be paid by a pension holder, under 20 (2), shall be borne by the pension holder.
(3) Detailed matters regarding the methods and procedures for educating pension holders, etc., under paragraph (1) 2 shall be prescribed by the Ordinance of the Ministry of Employment and Labor.

Article 20 (Allocation, Payment, etc. of Contributions)

(1) An employer who has established a defined contribution plan shall contribute no less than an amount equivalent to 1/12 of the total annual wages of a participant in cash to the participant's account of the defined contribution plan.

(2) Apart from the amount contributed by the employer under paragraph (1), a participant may contribute an additional amount at his/her own expense to his/her account of the defined contribution plan.

(3) An employer shall regularly pay contributions as prescribed in paragraph (1) at least once every year to the accounts of participants of the defined contribution plan. In such cases, if the employer fails to pay contributions by the fixed date (where the extension of the due date is allowed by the rules for defined contribution plan, by the due date so extended), he/she shall be liable to pay interest for arrears at an interest rate prescribed by Presidential Decree within the limit of 40/100 per annum, taking into consideration the overdue interest rates applied by banks as defined in the Banking Act, economic environment, etc. for the number of days of delay from the following day to the date when the contribution is paid.

(4) If the payment of contributions is delayed by an employer due to a natural disaster or any other cause prescribed by Presidential Decree, paragraph (3) shall not apply to the period during which such cause exists.

(5) If an employer fails to pay a contribution for a participant of a defined contribution plan when any cause prescribed by Presidential Decree, such as retirement of the participant, occurs, he/she shall pay the contribution prescribed in paragraph (1) and the interest for arrears prescribed in the latter part of paragraph (3) to the relevant participant's account of the defined contribution plan within 14 days from the date such cause occurs: Provided, That the due date may be extended by agreement between the parties concerned, in extraordinary circumstances.

(6) In lieu of the benefits to be received at the time of retirement, a participant may request the retirement pension trustee concerned to transfer his/her invested assets to his/her account of the individual retirement pension plan that he/she has established.

(7) Upon request by a participant under paragraph (6), the retirement pension trustee concerned shall transfer the invested assets to the participant's account of the individual retirement pension plan. In such cases, the participant's benefits accrued from the operation of the defined contribution plan shall be deemed paid.

Enforcement Ordinance

Article 11 (Rate of Interest on Unpaid Contributions)

“Interest rates prescribed by the Presidential Decree” in the latter part of Article 20 (3) of the Act means interest rates classified as follows:
1. From the next day of the date set for payment of contributions until the 14th day (the extended date in cases where the date for payment is extended under agreement between the parties concerned) after the date when a reason for paying benefits, such as retirement of a pension holder, occurs:an annual interest rate of 10/100
2. From the next day of last date of the period specified in subparagraph 1, until the date when contributions are paid:an annual interest rate of 20/100.

Enforcement Ordinance

Article 12 (Reasons for Exception in Application of Interest on Delayed Payment)

“Reasons prescribed by the Presidential Decree” in Article 20 (4) of the Act means cases pursuant to any subparagraph of Article 18 of the Enforcement Decree of the Labor Standards Act.

Enforcement Ordinance

Article 13 (Reasons for Payment of Unpaid Contributions)

“Reasons prescribed by the Presidential Decree” in the main sentence of Article 20 (5) of the Act means cases where a pension holder retires from the relevant business.

Article 21 (Methods of Operating Reserves and Supply of Information)

(1) A participant of a defined contribution plan shall be allowed to choose an operating method for him/herself and change the method of operating reserves at least once every half-year.

(2) A retirement pension trustee shall suggest at least three operating methods with different risk and return structures at least once every half year.

(3) A retirement pension trustee shall supply information required by a participant to choose a method of operating reserves, such as information on the probability of making profits and losses for each operating method.

Article 22 (Early Withdrawal of Reserves)

A participant of a defined contribution plan may withdraw his/her reserves early when a ground prescribed by Presidential Decree, such as housing purchases, occurs.

Enforcement Ordinance

Article 14 (Reasons for Interim Withdrawal in Defined Contribution Retirement Pension Plan)

“Reasons prescribed by the Presidential Decree, such as housing purchase” in Article 22 of the Act means any of the following cases:
1. Where Article 2 (1) 1, 1-2, 2, or 5 is applicable;
2. Where a pension holder is declared bankrupt pursuant to the Debtor Rehabilitation and Bankruptcy Act within five years counted retroactively from the date he/she applies for early withdrawal;
3. Where a pension holder receives a decision to commence individual rehabilitation procedures pursuant to the Debtor Rehabilitation and Bankruptcy Act within five years counted retroactively from the date he/she applies for early withdrawal.

Article 23 (Establishment of Defined Contribution Plan where Two or More Employers Participate)

Where a retirement pension trustee intends to suggest to establish the same defined contribution plan for two or more employers, he/she shall obtain approval from the Minister of Employment and Labor for each of the following matters:

1. Standard rules for the defined contribution plan including the following matters:

(a) Matters set forth in Article 19 (1);

(b) Any other matters prescribed by Presidential Decree;

2. Standard contract for operational management services and asset management services, which contains the matters prescribed by Presidential Decree.

Enforcement Ordinance

Article 15 (Matters to be Stipulated in Standard Rules)

“Matters prescribed by the Presidential Decree” in subparagraph 1 B of Article 23 of the Act means the following matters:
1. The characteristics and the name that reflects such characteristics of Defined Contribution Retirement Pension Plan, set by standard rules;
2. Matters concerning the scope or characteristics of businesses eligible to join;
3. The methods of managing reserves, and a criteria for selection thereof. In such cases, if a pension holder does not give any management instruction, management methods and their selection criteria shall be included;
4. Matters concerning the reasons for which a withdrawal can be made, the procedures for withdrawal, etc.;
5. Matters concerning fees;
6. Other matters necessary for reasonable management of Defined Contribution Retirement Pension Plan, of which two or more employers are involved, and determined by the Minister of Employment and Labor.

Enforcement Ordinance

Article 16 (Matters to be Stipulated in Standard Contract)

“Matters prescribed by the Presidential Decree” in subparagraph 2 of Article 23 of the Act means the following matters:
1. Matters concerning the implementation of the standard rules under subparagraph 1 of Article 23 of the Act;
2. Matters concerning calculation and paymnet of costs in regards to the operation of Defined Contribution Retirement Pension Plan, of which two or more employers are involved;
3. Matters concerning the reasons and procedures, etc. for terminating or changing a contract on operational management services and asset management services;
4. Other matters necessary for guaranteeing pension holders’ right to receive benefits, determined and announced by the Minister of Employment and Labor.

Enforcement Ordinance

Article 16-2 (Subject to the establishment of Individual Retirement Pension Plan)

Under the article 24 (2) 3, "A person prescribed by the Presidential Decree, who needs to secure stable old-age incomes, such as a self-employed person" refers to the following persons ;
1. Self-employed
2. An employee who doesn't have a retirement benefit system in accordance with the Article 4 (1) of the Act ;
a. An employee with a continuous working period of less than one year
b. An employee s with an average of 4 weeks work less than 15 hours a week.
3. An employee subject to severance pay system under Article 8 (1) of the Act
4. A civil servant subject to the Public Service Pension Act
5. A soldier subject to the Military Pension Act
6. An employee subject to the Private School Teachers ' Pension Act
7. A special post office worker subject to the Act of the Independent States
[New Article 2017.4.18]

For further questions, please
call (+82) 2-539-0098 or email bongsoo@k-labor.com

    • 맨앞으로
    • 앞으로
    • 다음
    • 맨뒤로