According to the Labor Standards Act of Korea, if a worker has worked for more than one year, the worker shall be given severance pay in the amount of at least 30-day average wages for each year of service. Severance pay, in principle, should be paid ...
According to the Labor Standards Act of Korea, if a worker has worked for more than one year, the worker shall be given severance pay in the amount of at least 30-day average wages for each year of service. Severance pay, in principle, should be paid after resignation. However, should an employee request, he or she may receive, in advance, severance pay corresponding to their years of service to date.
Recently due to growing job transfer and widespread withdrawal of severance pay before retirement, the current severance pay system does not function well as a means to secure old-age income. In addition, workers in the workplaces with five workers and the short-term workers whose working period is less than one year are excluded from the current severance pay system.
The OECD and the World Bank made the policy recommendation that Korea set up a multi-level pension system for securing old-age income by shifting to a retirement pension scheme, while maintaining the current national pension system. Introduction of the retirement pension scheme had been under discussion at the Tripartite Commission since July 2001, and the law called "the Workers' Retirement Benefit Guarantee Act" was been enacted January 2005, has been in force since December 2005.
When establishing or changing their retirement benefit system, employers should hear opinions from workers' representatives. If employers want to make unfavorable changes, they should obtain consent from workers' representatives. But the meaning of "workers' representatives" differs from that of the Labor Standards Act. And the scope between hearing and consent subjects is not clear.
Whether the benefit of retirement benefit system corresponds to the 'wage' on the Labor Standards Act is controversial. The coverage should be extended to workplaces with four workers or less as soon as possible.
For the protection of vested rights, beforehand measures should be strengthened. The private law policy(prudent-person rules) will be applicable to this. And ex post facto measures as PBGC in US should be prepared. It is necessary for minimum requirement for equity capital or equivalent solvency to be extended.
Concerning the retirement pension firms, operation management services and asset management services can be done by the same firm. This problem should be corrected because of the danger of moral hazard. Regarding the quantitative regulations of investment, it is necessary for the investment in company's share to be included in investment risk assets and for the 40% maximum of that to be continued for the time being referring to stock market situation of Korea.
The permissible conditions for the loan security and early withdrawal of vested rights should be narrowed referring to the purpose of pension system. And the supervising institution of corporate pension system as OPRA in England is necessary.
key words: occupational pension scheme, retirement pension benefit, workers' representatives, protection of pension benefit, retirement pension firms, loan security, early withdrawal