Defined Contribution Plan (DC)
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A type of pension plan in which the level of employer’s contributions is defined and known in advance
(e.g.: 1/12th of total annual wages)
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- Responsibility for reserves operation and operating results lies with the employee.
- Retirement benefits may vary depending on operating results.
- Employee may make additional contributions at their own expense.
- When the benefits are provided, they are transferred to Individual Retirement Pension.
확정기여형(DC) - 상품선택:근로자, 자산운용의책임:근로자, 운용의 결과:기업에 귀속(근로자는 본인 부담으로 추가납입이 가능)
- 기업-기업이 적립
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- 퇴직연금사업자 - 근로자가 직접 운용 및 관리
- 근로자 - 개인형퇴직금제도 의무이전, 일시금 또는 연금수령
기업은 퇴직연금사업자에게 부담금 사업확정을 하며, 퇴직연금사업자는 근로자에게 퇴직급여 변동이 있습니다.
Exemption from mandatory transfer to IRP
- When retirement occurs after age 55
- In the event of repayment of a secured loan under the Employee Retirement Benefit Security Act. The remaining amount needs to be transferred to an IRP.
- When total retirement benefits are less than amount (KRW 3 mil) designated by the Ministry of Labor
Merits of DC plan
- Employer
(Plan Sponsor)
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Corporate tax savings
Contributions are fully recognized as loss/expense
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Improved
financial structure
No retirement allowance burden because payment of retirement benefits is made annually
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Less administrative
burden
Efficient and convenient personnel and cash management
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Employee education
Positive effects of employee continuing education on retirement pension operation and financial investment
- Employer
(Plan Participant)
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Additional returns
Additional returns can be expected depending on employee’s risk appetite
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Protection of right to
obtain benefits
At least 1/12th of average annual wages for each employee is accumulated by the end of each fiscal year, ensuring the right to receive pension benefits
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Tax deduction
Additional contributions paid out by the employee are subject to a tax deduction of up to KRW 9 mil per year
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Early withdrawal
Early withdrawal is possible when legal requirements are met
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Summary
One can manage retirement benefits even after changing jobs, making it possible to prepare for retirement living and defer retirement income tax until actual retirement
Legal grounds for early withdrawal
- When a participant who is a non-homeowner intends to purchase a house under their own name
- When a participant who is a non-homeowner pays a jeonse deposit under Article 303 of the Civil Act or a security deposit under Article 3-2 of the Housing Lease Protection Act for residential purpose(In such cases, the number of such occurrences shall be limited to one time while the participant works at the same business or workplace)
- When a participant him/herself, the participant’s spouse, or family members dependent on the participant or the participant’s spouse as defined in paragraph 1 of article 50 of the Income Tax Act require at least six months of convalescence, and also medical expenses paid exceed 12.5% of the total annual wages of the participant
- When a participant is declared bankrupt pursuant to the Debtor Rehabilitation and Bankruptcy Act within 5 years counted retroactively from the date of requesting early withdrawal
- When a participant receives a decision to commence individual rehabilitation procedures pursuant to the Debtor Rehabilitation and Bankruptcy Act within 5 years counted retroactively from the date of requesting early withdrawal
- Other cases falling under the grounds and requirements publicly notified by the Minister of Employment and Labor, such as where damage is caused by a natural disaster and where a participant who received loan secured by the right to receive benefits under retirement pension plan intends to repay the principal/interest of such loan
Standard retirement pension
Standard retirement pension plan is a type of pension in which the pension provider enacts/reports standard regulations and then establishes/operates Hana Bank’s DC plan for two or more employers.
For small & medium-sized companies, the administrative burden such as labor-management agreement and regulation reporting is lessened. In addition, the greater the employer’s assets, the lower the costs of operating the plan.
- “퇴직연금사업자가 먼저 만들어 놓은 규약에 각 회사들이 가입”
- 퇴직연금사업자가 표준규약을 여러개를 만들고 각 회사들이 각 규약에 가입
Depositor Protection
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This plan is protected under the Depositor Protection Act only for reserves invested in financial products that are subject to depositor protection. In such cases, protection is limited to KRW 50 mil per person, which is apart from the depositor protection limit for your other financial products. The amount in excess of KRW 50 mil is not subject to protection.