Small and Medium Enterprises' Retirement Pension Fees 'Exempted' for 5 Years... Will Enrollment Rates Increase?

The fees for the country's first public retirement benefit system, the 'Small and Medium Enterprise Retirement Pension Fund System (Pureun Seed),' will be fully waived for the next five years. As a result, the subscription rate is expected to increase in small-scale workplaces with fewer than 30 employees, where retirement pension enrollment has been low.

The Korea Workers' Compensation and Welfare Service announced on the 12th that at the Small and Medium Enterprise Retirement Pension Fund System Operations Committee held on the 10th, it was decided to waive 100% of the fees for employers and subscribers enrolled in this system for the next five years.

The Small and Medium Enterprise Retirement Pension Fund System was implemented in September last year to reduce the income gap in old age between workers in large corporations and those in small and medium enterprises through retirement pensions.

This system creates and operates a joint fund from contributions paid by small and medium enterprise employers and workers to provide retirement benefits to employees.

Only small and medium enterprise workplaces with fewer than 30 regular employees can enroll. In small businesses, there may be cases where retirement pay cannot be provided due to business conditions, but this system not only prevents the risk of delayed retirement payments but also offers the expectation of stable returns.

As of the end of February, about 13,000 people from approximately 2,800 workplaces had enrolled, with accumulated funds totaling 53 billion KRW. The annualized yield rate is recorded at 2.93%.

The fee reduction applies to workplaces with fewer than 30 employees that have enrolled in this system from September last year through the end of this year.

Currently, a workplace with an average accumulated fund of 500 million KRW would have to pay about 2.5 million KRW annually in fees if enrolled with a private retirement pension provider, but by enrolling in this system, they do not have to pay any fees for five years.

Additionally, employers enrolling in this system receive support for 10% of the employer's contribution for workers earning less than 2.42 million KRW for three years. The Service supports up to 240,000 KRW per eligible person, up to 30 people, providing a maximum of 7.2 million KRW annually to the employer, thereby reducing financial burdens.

The Service expects that this fee waiver will increase enrollment among workplaces with fewer than 30 employees. In 2021, the retirement pension adoption rate was 27.1%; among them, workplaces with 30 or more employees had a rate of 78.9%, but those with fewer than 30 employees had only 24.0%.

Kang Soon-hee, Director of the Service, said, "Many small and medium enterprises hesitated to introduce retirement pensions due to financial burdens, but this fee waiver lowers the entry barrier to the retirement pension market. Since the introduction of retirement pensions in small and medium enterprises is essential to secure life after retirement, we will continue to improve the system steadily."