EMPLOYEE RETIREMENT BENEFIT SECURITY ACT [See entire ACT]
CHAPTER II Establishment of Retirement Benefit Scheme
- Article 4 (Establishment of Retirement Benefit Schemes)
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(1) Each employer shall establish at least one retirement benefit scheme in order to pay benefits to retiring employees: Provided, That this shall not apply to employees whose continuous service period is less than one year, nor employees whose average weekly working hours over a four-week period is less than 15 hours.
(2) In establishing a retirement benefit scheme pursuant to paragraph (1), no differentiation shall be made within the same business in respect of the application, etc. of the method for calculating the amount of benefits or contributions.
(3) If any employer intends to establish a type of retirement benefit scheme or change an existing type into a different one, the employer shall, if a trade union participated by a majority of employees exists at the business concerned, obtain the consent of the trade union, and if no such trade union exists, obtain the consent of a majority of employees (hereinafter referred to as "representatives of employees").
(4) If any employer intends to change the details of a retirement benefit scheme established or changed pursuant to paragraph (3), he/she shall seek opinions from the representatives of employees: Provided, That if the employer intends to change such details in a manner unfavorable to employees, he/she shall obtain the consent of the representatives of employees.
- Article 5 (Retirement Benefit Schemes of Newly Established Businesses)
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The employer of a business newly established on or after the enforcement date of the Guarantee of Employees' Retirement Benefits Act as wholly amended by Act No. 10967 (excluding where merged or partitioned) shall establish a defined benefit plan or a defined contribution plan within one year of the establishment of the business after seeking the opinions of the representatives of employees.
- Article 6 (Establishment of Two or More Retirement Pension Plans for Participants)
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(1) Where an employer simultaneouslyestablishesadefined benefit plan and a defined contribution plan for participants, the amount of benefits under the defined benefit plan or the amount of contributions under the defined contribution plan shall be as follows, notwithstanding Articles 15 and 20 (1):
1. Benefits under the defined benefit plan: The amount obtained by multiplying the amount of benefits prescribed in Article 15 by the establishment ratio prescribed by rules for defined benefit plan;
2. Contributions under the defined contribution plan: The amount obtained by multiplying the amount of contributions prescribed in Article 20 (1) by the establishment ratio prescribed by rules for defined contribution plan.
(2) An employer shall formulate rules for retirement pension plan whereby a retirement pension plan is established in such a manner that the total of the respective establishment ratios referred to in paragraph (1) 1 and 2 shall not be less than one.
- Article 7 (Protection of Entitlement to Receive Benefits)
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(1) An entitlement to receive benefits under a retirement pension plan shall neither be transferred to others nor offered as collateral.
(2) Notwithstanding paragraph (1), a participant may provide an entitlement to receive benefits as collateral to the extent prescribed by Presidential Decree where the grounds and conditions prescribed by Presidential Decree, such as housing purchases, are fulfilled. In such cases, a retirement pension trustee registered under Article 26 shall cooperate with the participant so that he/she can secure the loan with the benefits as collateral.
Enforcement Ordinance
- Article 2 (Reasons for Offering Right to Receive Benefits as Collateral)
(1) “Cases where the reasons and conditions prescribed by the Presidential Decree, such as housing purchases, etc., are met” in the former part of paragraph (2) of Article 7 of the Act refers to any of the following cases：
1. Where a pension holder who did not own a house has purchased a house；
1-2. Where a pension holder who is a non-homeowner takes a responsibility for the tenancy deposit under Article 303 of the Civil Act or a security deposit under Article 3-2 of the Housing Lease Protection Act for residential purposes. In such cases, the number of such occurrences shall be limited to one time while the worker works in the same business or workplace (hereinafter referred to as "business");
2. Where a pension holder pays the medical care costs incurred for convalescence from illness or injury of a person falling under any of the following, which requires at least six months of convalescence:
(a) The pension holder himself/herself;
(b) The spouse of the pension holder;
(c) The family members dependent on the pension holder or the spouse of the pension holder;
3. Where a pension holder has received a decision for commencement of a rehabilitation proceeding under the Debtor Rehabilitation and Bankruptcy Act within the past five years from the date of offering collateral；
4. Where a pension holder has been declared bankrupt under the Debtor Rehabilitation and Bankruptcy Act within the past five years from the date of offering collateral；
4-2. Where a pension holder pays the college tuitions, wedding expenses, or funeral expenses of any of the following persons:
(a) The pension holder himself/herself;
(b) The spouse of the pension holder;
(c) The family members dependent on the pension holder or the spouse of the pension holder;
5. Where other reasons and conditions prescribed by the Ordinance of the Ministry of Employment and Labor, such as natural disasters, armed conflicts, etc. are met.
(2) “The extent prescribed by the Presidential Decree” in the former part of paragraph (2) of Article 7 of the Act refers to the extent set by the following criteria：
1. 50/100 of reserve per pension holder in cases under subparagraphs 1, 1-2, 2 through 4, and 4-2 of paragraph (1): 50/100 of each pension holder’s reserve;
2. in case of subparagraph (5) of Article 1, the extent to be noticed by the Minister of Employment and Labor in consideration of damages and losses incurred to a pension holder as a consequence of natural disasters, armed conflicts, etc.
- Article 8 (Establishment, etc. of Retirement Allowance Systems)
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(1) Any employer who intends to set up a retirement allowance system shall establish a system that makes it possible to pay a retiring employee a prorated amount equivalent to average wages earned for 30 days for each year of his/her continuous service.
(2) Notwithstanding paragraph (1), any employer may, upon request by an employee due to a ground prescribed by Presidential Decree, such as housing purchases, pay such employee a retirement allowance for his/her continuous service period prior to his/her retirement. In such cases, the continuous service period to be used for the calculation of the amount of a retirement allowance accumulated thereafter shall be reckoned anew from the time when the balance is settled.
Enforcement Ordinance
- Article 3 (Reasons for Interim Severance Payment)
(1) “Reasons prescribed by the Presidential Decree, such as housing purchases, etc.” in the former part of Article 8 (2) of the Act means any of the following cases：
1. Where an employee who did not own a house purchases a house in his/her own name；
2. Where an employee who did not own a house pays deposit money under Article 303 of the Civil Act, or deposit under Article 3-2 of the Housing Lease Protection Act, for residential purposes. In such cases, only once per employee shall be permitted in one business (hereinafter referred to as “business”)；
3. Where an employee, his/her spouse or a dependent family member living together with a worker or his/her spouse under Article 50 (1) of the Income Tax Act requires six months or longer period of medical care due to an illness or injury；
4. Where an employee is declared bankrupt under the Debtor Rehabilitation and Bankruptcy Act within five years counting backward from the date of application for the interim severance payment；
5. Where an employee receives a decision to commence rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act within five years counting backward from the date of application for the interim severance payment；
6. Where wages become reduced as a result of implementing the wage peak system under Article 28 (1) 1 through 3 of the Enforcement Decree of the Employment Insurance Act；
6. Where an employer implements a system of reducing wages based on a particular age, length of consecutive service, or amount of wage through a collective agreement, employment rules, etc. on the condition of extending or guaranteeing the current full retirement age;
6-2. Where an employer has changed a worker’s contractual working hours by at least one hour a day or five hours a week under agreement with the worker, and the worker has agreed to continue to work for at least three months based on the changed contractual working hours;
6-3. If the severance pay of the worker is reduced due to a reduction of the working time pursuant to enactment of the revised Labor Standards Act, Act No. 15513 ;
7. Other cases falling under the reasons and conditions determined and announced by the Minister of Employment and Labor, such as when damage is inflicted by natural disasters, etc.
(2) If an employer settles severance payment before retirement due to the reasons specified in each subparagraph of paragraph (1), he/she shall preserve relevant documents proving the fact, until the day marking five years after the employee retires.
- Article 9 (Payment of Retirement Allowances)
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Where any employee retires from his/her office, the employer shall pay such employee a retirement allowance within 14 days from the date when a ground for the payment occurs: Provided, That the payment date may be delayed under an agreement by the parties concerned in extraordinary circumstances.
- Article 10 (Extinctive Prescription of Retirement Allowances)
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If an entitlement to receive a retirement allowance under this Act has not been exercised within three years, the extinctive prescription of such entitlement shall be complete.
- Article 11 (Treatment of Non-Establishment of Retirement Benefit Scheme)
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Notwithstanding the main sentence of Article 4 (1) and Article 5, if any employer fails to establish a retirement benefit scheme or an individual retirement pension scheme under Article 25 (1), such employer shall be deemed to have established a retirement allowance system under Article 8 (1).
- Article 12 (Preferential Payment of Retirement Benefits, etc.)
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(1) Retirement allowances that an employer is obligated to pay, benefits under a defined benefit plan as prescribed in Article 15, delinquent contributions and interest for arrears on delinquent contributions of the contributions under a defined contribution plan as prescribed in Article 20 (3), and delinquent contributions and interest for arrears on delinquent contributions of the contributions under an individual retirement pension plan as prescribed in Article 25 (2) 4 (hereinafter referred to as "retirement benefits, etc.") shall be paid in preference to taxes, public charges and other claims, except for claims secured by pledges or mortgages on the whole property of the employer: Provided, That this shall not apply to taxes and public charges taking precedence over pledges or mortgages.
(2) Notwithstanding paragraph (1), retirement benefits, etc. for the final three years of service shall be paid in preference to claims secured by pledges or mortgages, or to taxes, public charges, and other claims on the whole property of an employer.
(3) The amount of retirement allowances of the retirement benefits, etc. and the amount of benefits under a defined benefit plan as prescribed in Article 15 shall be a prorated amount equal to the average wages earned for 30 days for each year of continuous service.
(4) The amount of contributions under a defined contribution plan as prescribed in Article 20 (1) and the amount of contributions under an individual retirement pension plan as prescribed in Article 25 (2) 2, of the retirement benefits, etc., shall be an amount equal to 1/12 of the total annual wages of the participant.
