We are living in a society where required to prepare the post-retirement life earlier by ourselves. With a national pension, it is not enough to maintain a long senior life. Thus, the retirement pension plan started in 2005. Under retirement pension plan, workers could accumulate their retirement benefits occurring during whole service years in a single account, the retirement pension help workers to prepare their senior life more affluently and comfortably.
Since the retirement pension plan has been started as of December 2005, the retirement benefit fund is continuing growth and the reserve recorded over 50 trillion won by April 2012. Most companies where there are more than 500 employees are supporting their employees to prepare their after-retirement life via retirement pension.
Retirement benefits paid in a lum sum? Prepare wisely with pension!
Under severance payment plan, retirement benefit is paid at the point of employee’s retirement with a sizable amount of money. However, it is hard to divide lump-sum retirement benefits efficiently into whole senior life, In addition, there is a risk of losing money as a result of investment
Under retirement pension plan, retirees can receive their retirement benefits as annuity until they want from retirement pension service provider. Therefore, retirees can gain stable income even if retired.
Retirement benefit is not actually accumulated?
Safely saving up to financial institutions
Under the severance payment plan, the employer was not forced to accumulate the employees’ retirement benefits into external financial institutions. Therefore, most employers did not actualy accumulate the resources of retirement benefits, thus, it existed on the paper only.
Therefore, it was hard for the employer to pay lump-sum retirement benefits when retirement happened and employees could not be paid their benefits instantly. In the worst case, retirees couldn’t receive benefit in case of default. Under retirement pension plan, as the company have to pay contributions regularly for employees’ retirement benefits during the employment, the right to receive retirement benefits becomes safer.