South Koreaโs government and ruling Democratic Party have proposed requiring every workplace to hold retirement benefits outside the company by 2030, a phased change intended to prevent workers from losing money when employers fail to pay. The plan would extend external funding across the business sector rather than leaving retirement obligations on company books.
The timetable would begin in 2028 for workplaces with at least 100 employees. Businesses with 10 to 99 employees would follow in 2029, and those with fewer than 10 employees in 2030. The proposal still requires legislation, with the government planning an amendment to the Employee Retirement Benefit Security Act and seeking passage by the National Assembly before the end of the year.
A three-year rollout across workplaces
Financial assistance is intended to ease the transition for smaller employers. Companies that adopt external funding early would receive support equal to 10 percent of contributions for workers earning less than 130 percent of the minimum wage. Small and medium-sized businesses introducing retirement pensions would also be offered a two-percentage-point interest-rate benefit on management financing. The government budget proposal includes 12.2 billion won for related support.
- 2028
- Workplaces with at least 100 employees
- 2029
- Workplaces with 10 to 99 employees
- 2030
- Workplaces with fewer than 10 employees
- Proposed support budget
- 12.2 billion won
The package also seeks to expand fund-type retirement pensions, under which professional trustees manage pooled assets and investment gains or losses flow to participants. Private financial companies would be allowed to participate in the fund structure. Officials are also considering a system that pays benefits as a pension unless a worker first requests a lump sum, along with institutional changes to permit loans secured against retirement pension assets.
Labor Minister Kim Young-hoon said the government wants to develop retirement pension assets exceeding 500 trillion won into a stronger source of income in old age. The Korea Enterprises Federation agreed with protecting workersโ benefit rights but warned that mandatory participation could strain the finances and operations of very small businesses. It called for careful sequencing and sufficient support as the requirements are expanded.