Labor Law Q&A details

Chapter 7 Retirement Management

The EU manages a complementary Brussels-based pension fund for its local staff (defined monthly employer + employee contributions are paid into a fund to cumulate interest – the total amount paid in contributions is then paid out to the employee as a lump sum at the end of the employment contract). Is this system compatible with local law? Can the lump sum be paid by the Delegation to an account of the employee outside the country of employment?

Article 19 (Establishment of Defined Contribution Plans), Guarantee of Workers’ Retirement Benefits Act, as last amended by Act No. 10967, July 25, 2011

An employer who has established a defined contribution plan for retirement pension shall contribute no less than an amount equivalent to 1/12 of the total annual wages of an employee in cash to the employee’s account of the defined contribution plan.

The EU complementary pension fund can be compatible if the employer pays at least 1/12 of the total annual wages of an employee for his/her contribution.


*Guarantee of Workers' Retirement Benefits Act

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, therepresentatives of workers 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".

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