Pureun Seed Subscribers Increase More Than Tenfold
"Eliminating Blind Spots Through Mandatory Retirement Pensions"
The 'Small and Medium Enterprise Retirement Pension Fund (Pureun Seed),' introduced as a fund-type system to revitalize retirement pensions for small and medium-sized enterprises with fewer than 30 employees, has surpassed 1 trillion won in assets within just over two years, achieving an annual return rate of 6.5%. The number of participating workplaces and workers has also increased more than tenfold. The Ministry of Employment and Labor announced plans to actively discuss and introduce fund-type retirement pensions based on these achievements.
On the 26th, the Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service held a ceremony and on-site meeting at the Korea Workers' Compensation and Welfare Service Seoul Joint Office in Yeongdeungpo-gu, Seoul, to celebrate the Pureun Seed fund surpassing 1 trillion won. Attendees included Minister Kim Moon-soo of the Ministry of Employment and Labor, Director Park Jong-gil of the Korea Workers' Compensation and Welfare Service, and representatives from meritorious organizations such as the Korea Oriental Medicine Association and the Korea Childcare Association.
Pureun Seed is the only public fund-type retirement pension system in Korea, introduced in September 2022 to help workers in small and medium-sized enterprises with fewer than 30 employees prepare for their retirement. It operates by pooling contributions paid by both employers and employees of small businesses into a joint fund, which is then managed and used to provide retirement benefits to workers. Employers pay contributions to the Korea Workers' Compensation and Welfare Service, which accumulates the funds and entrusts asset management to financial institutions. The government supports 10% of the contributions for both employers and employees and waives all fees for participating workplaces.
As of the end of last year, Pureun Seed had 108,515 workers enrolled across 23,233 workplaces, more than ten times the number at its introduction. Consequently, the fund's assets reached 500 billion won in January last year and exceeded 1 trillion won by the end of the year. The cumulative return rate last year was 14.67%, with an annual return rate of 6.52%, which is higher than the typical retirement pension return rate of around 2%.
At the event, Minister Kim stated, "The achievements of the Small and Medium Enterprise Retirement Pension Fund system over the past two years indicate the direction our country's retirement pensions should take." He added, "We will eliminate blind spots through mandatory retirement pensions and introduce a fund-type retirement pension system. We are committed to accelerating retirement pension reforms so that retirement pensions become a core pillar of Korea's old-age income security system."
The Ministry of Employment and Labor plans to address the blind spots in retirement pensions to prevent disparities in workers' retirement lives caused by company size, noting that while the retirement pension enrollment rate is over 90% for workplaces with 300 or more employees, it is only 23% for those with fewer than 30 employees. Efforts will also be made to prevent unpaid retirement benefits, which account for 40% of wage arrears. Furthermore, discussions on introducing fund-type retirement pensions will be actively pursued, and reforms will be implemented swiftly.
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