Yellow Umbrella Mutual Aid, Available During Disasters and Illnesses, with Mid-Term Settlement Possible

Significant Expansion to 8 Deduction Reasons Starting Next Month 1
Interim Settlement Allowed to Support Overcoming Temporary Liquidity Crisis

The Ministry of SMEs and Startups announced on the 29th that starting from the 1st of next month, it will significantly expand the reasons for payment of the Yellow Umbrella Mutual Aid Fund benefits to include disasters and diseases, and will also reform the system to allow interim settlements of benefits in case of temporary business crises.

The Yellow Umbrella Mutual Aid Fund was introduced in 2007 to protect small businesses and small merchants from livelihood threats such as business closure or old age. Until now, benefits could only be paid in four cases that practically correspond to business closure: closure, death, retirement, and old age.

With this reform, starting from the 1st of next month, four additional reasons for benefit payment will be added to the current ones: natural disasters, social disasters, illness/injury, and rehabilitation/bankruptcy. This means that small merchants can receive and utilize benefits even when experiencing a temporary crisis that does not correspond to business closure. For the four newly added reasons for benefit payment, subscribers can choose to receive benefits while maintaining their mutual aid contract and continue to enjoy various benefits of the Yellow Umbrella Mutual Aid Fund through interim settlements.

Hwang Young-ho, head of the Small Business COVID-19 Recovery Support Group at the Ministry of SMEs and Startups, said, “The Yellow Umbrella Mutual Aid Fund, which has so far focused on roles such as benefit payments after business closure, can now proactively support temporary business crises through this reform,” and “We will continue to actively collect opinions from the field and expand benefits centered on subscribers so that the Yellow Umbrella Mutual Aid Fund becomes a reliable social safety net that empowers small merchants.”

Meanwhile, the Yellow Umbrella Mutual Aid Fund operated by the Korea Federation of SMEs currently has 1.7 million registered small business and small merchant subscribers since its launch, providing a social safety net for small businesses and small merchants with income tax deduction benefits of up to 5 million KRW per year and protection against benefit seizure. It also offers various welfare services to subscribers, including free management consultations on legal, tax, and labor matters, discounted rates for recreational facilities, capacity-building education, and group accident insurance enrollment.