In Retirement Pension Plan, a company prepares employees' retirement benefit by paying contributions regularly. Contribution is the money paid for the employee's retirement benefits.
In terms of employers, financial stress to make a lump-sum benefit when an employee retires is reduced. when an employee, the right to receive the retirement benefits is strengthened.
Retirement benefits paid by the company accumulated to financial institutions and the reserves managing status is monitored. When the employee retires, the financial institution pays the employees’ benefits as lump-sum or annuity even though in case of the company’s default.
It means that the right to receive the retirement benefit is strengthened and the right to select the form of benefit collection is diversified.
Check the differences between retirement lump-sum plan and retirement pension plan.
|Classification||Retirement lump sum plan||Retirement pension plan|
|Retirement (contribution) reserve||Funding within the company
(voluntary external funding)
|Mandatory external funding|
|Investment Responsibility||Company||Company(DB) / Employee(DC)|
|Receive retirement benefit||Early Withdrawal||Not possible
(Allowed to meet the
(in special occasion to be
prescribed by the law)
|How to receive retirement benefit||Lump Sum only||Lump Sum or Annuity
(Transferred into the IRP.
whether to receive lump sum or annuity)
|Retirement benefit level||30days average wages for each
year of consecutive service x
|DB : Monthly salary when retired ×
years of employment
DC :1/12 of total annual wage ±
(It depends on the individual
|Guarantee vested rights||Unsecured||Secured as much as external funding|
Conditions prescribed by the presidential decree for a early withdrawal in retirement
lump sum plan
Conditions for collateral loan or early withdrawal prescribed by the presidential in the retirement pension plan