The South Korean government plans to accelerate reforms of the retirement pension system, including the introduction of a fund-type system, with legal amendments expected by the end of the year.
The South Korean government is taking measures to improve the retirement pension system, with a particular focus on introducing a fund-type retirement pension system. In a meeting chaired by Deputy Prime Minister Gu Yun-cheol, the Ministry of Employment and Labor announced that specific operational plans for the proposed system will be prepared by July. This announcement follows an earlier agreement reached by a task force focused on strengthening the functions of retirement pensions, which included the promotion of the fund-type system and mandates for external custody of retirement benefits.
The Ministry has committed to amend the Worker Retirement Benefit Security Act within this year as part of the follow-up actions to the labor-management-government agreement. To facilitate this, a 'working-level task force' will be established by July, including relevant ministries like the Ministry of Employment and Labor, the Ministry of Strategy and Finance, and the Financial Services Commission, alongside experts and labor representatives. This task force will review licensing requirements, trustee responsibilities, and management and supervision systems, aiming to foster the activation of the fund-type retirement system in response to concerns over the low profitability of the existing contract-type system.
In a related initiative, the government plans to conduct a survey by June on the actual conditions of small and medium-sized enterprises, which will inform a phased implementation of mandatory external custody for retirement benefits. This initiative aims to ensure that employees can receive their retirement payments even if their employer goes bankrupt, providing necessary protections, especially for vulnerable workers such as those in precarious employment situations. Strategies to secure old-age income for workers who do not receive retirement benefits, including those with less than a year of employment, special workers, and platform workers, will also be developed through social dialogue among labor, management, and government stakeholders.
