EMPLOYEE RETIREMENT BENEFIT SECURITY ACT [See entire ACT]

CHAPTER Ⅴ Individual Retirement Pension Plan

Article 24 (Establishment, Operation, etc. of Individual Retirement Pension Plans)

(1) Any retirement pension trustee may operate an individual retirement pension plan.

(2) Any person falling under any of the following subparagraphs may establish an individual retirement pension plan:

1. A person who has received lump-sum benefits under a retirement benefit scheme;

2. A participant of a defined benefit plan or a defined contribution plan who intends to additionally establish an individual retirement pension plan at his/her own expense;

3. A person prescribed by Presidential Decree as requiring a stable source of old-age income, such as a sole proprietor.

(3) A person who has established an individual retirement pension plan under paragraph (2) shall pay the contributions under the individual retirement plan at his/her own expense: Provided, That the amount to be contributed shall not exceed the limit prescribed by Presidential Decree.

(4) Article 21 shall apply mutatis mutandis to the method of, and supply of information on, the operation of reserves under an individual retirement pension plan. In such cases, "defined contribution plan" shall be construed as "individual retirement pension plan".

(5) Matters concerning eligibility requirements of recipients for each type of benefit of an individual retirement pension plan as well as early withdrawal shall be prescribed by Presidential Decree.

Enforcement Ordinance

Article 17 (Contribution Limits of Individual Retirement Pension Plan)

“Limit prescribed by the Presidential Decree” in the proviso of Article 24 (3) of the Act means 18 million won a year excluding lump-sum pensions, etc., paid by business where the employee previously worked, under a Retirement Benefit Scheme (the sum of all contributions in cases if there are more than one Individual Retirement Pension Plan accounts).

Enforcement Ordinance

Article 18 (Eligibility Requirements by Types of Benefit in Individual Retirement Pension Plan, and Interim Withdrawal)

(1) The eligibility requirements for recipients by type of benefit under an Individual Retirement Pension Plan under Article 24 (5) of the Act are classified as follows:
1. Annuity:This type of benefits is paid to pension holders aged 55 or older. In such cases, the duration of payment shall be five years or longer;
2. Lump-sum:This type of benefits is paid to pension holders aged 55 or older who want to receive lump-sum benefits.
(2) If a pension holder falls under any subparagraph of Article 14 (1), he/she may make an interim withdrawal of his/her reserves under an individual retirement pension plan pursuant to Article 24 (5) of the Act.

Article 25 (Special Cases for Businesses Employing Less Than 10 Employees)

(1) In cases of a business employing less than 10 ordinary employees, if the employer establishes an individual retirement pension plan with the consent, or at the request, of individual employees, it shall be deemed to have established a retirement benefit scheme for the relevant employees, notwithstanding Articles 4 (1) and 5.

(2) In establishing an individual retirement pension plan under paragraph (1), the following shall be complied with:

1. Where the employer selects a retirement pension trustee, he/she shall obtain the consent of individual employees: Provided, That he/she may select the retirement pension trustee for himself/herself, if requested by the employees;

2. The employer shall contribute, in cash, at least 1/12 of the total annual wages of each participant to the participant's account of individual retirement pension plan;

3. A participant shall be allowed to contribute additional amounts at his/her own expense, apart from those contributed by the employer;

4. The employer shall regularly pay contributions as prescribed in subparagraph 2 to the participant's account of an individual retirement pension plan at least once every year. In such cases, the latter part of Article 20 (3) and Article 20 (4) shall apply mutatis mutandis to the payment of interest on arrears of contributions, the payment of which is delayed;

5. Any other matter prescribed by Presidential Decree in order to protect employees' entitlement to receive benefits.

(3) Where an employer fails to pay a contribution as prescribed in paragraph (2) 2 for a participant of an individual retirement pension plan when any cause prescribed by Presidential Decree, such as retirement of the participant, occurs, he/she shall pay the contribution and the interest for arrears prescribed in the latter part of paragraph (2) 4 to the relevant participant's account of the individual retirement pension 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.

Enforcement Ordinance

Article 19 (Special Cases for Businesses Employing Less Than Ten Workers)

(1) The eligibility requirements for recipients by type of benefit under an Individual Retirement Pension Plan under Article 25 of the Act are specified in each subparagraph of Article 17 (1) of the Act.
(2) Fees on contributions paid by an employer under Article 25 (2) 2 of the Act shall be borne by the employer, and fees on contributions paid additionally by a pension holder under subparagraph 3 of the same paragraph, shall be borne by the pension holder.
(3) “Reasons prescribed by the Presidential Decree” in the main sentence of Article 25 (3) of the Act means cases where a pension holder retires from the business.

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

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