Mandatory external reserve for all workplaces targeted by 2030

Industry calls for longer approval window, legal reforms

[Newsis]
[Newsis]

The government reviewed preparations for the introduction of a fund-type retirement pension system and the mandatory external reserve of retirement benefits across all workplaces with major retirement pension providers. Banks, insurers and securities firms called for sufficient lead time before the fund-type system's licensing process begins and urged the establishment of a support framework for small businesses.

The Ministry of Employment and Labor and the Financial Supervisory Service held the "2026 Retirement Pension Provider Roundtable" on Friday, with the Korea Workers' Compensation and Welfare Service and major retirement pension providers in attendance. Representatives from Hana, Shinhan, KB Kookmin and Woori Bank, as well as Samsung, Hanwha and Kyobo Life, and Mirae Asset and NH Investment & Securities, took part.

The roundtable was organized to share the key details of the "Retirement Pension Function Enhancement Plan" jointly announced by related ministries on Oct. 29 and to gather industry feedback on the proposed reforms. The government also stressed the role providers must play in securing the stability and adequate returns of retirement pensions.

Specifically, if the relevant bill passes the National Assembly this year, the government plans to phase in mandatory external reserves for retirement benefits — starting with workplaces of 100 or more employees in 2028, expanding to those with 10 to 99 employees in 2029, and covering workplaces with fewer than 10 employees by 2030, following a one-year preparation period. The existing contract-type retirement pension will be retained while a fund-type option managed by a professional trustee will be added to broaden subscribers' choices. The government also plans to provide projected payout comparisons between annuity and lump-sum options at retirement, and to default to annuity payments unless a subscriber explicitly requests a lump sum.

Retirement pension providers called for the creation of a public-private joint support system for small businesses, sufficient preparation time for fund-type retirement pension licensing, and legal and regulatory improvements to allow a wider range of pension products to be offered.

The FSS cautioned against excessive competition among financial firms during the fund-type retirement pension rollout. FSS Governor Lee Chan-jin instructed providers to establish objective selection procedures and post-implementation monitoring systems to prevent any particular financial firm or product from receiving unfair preferential treatment on the basis of affiliate relationships or business interests, and to disclose information on investment performance, risk and costs transparently.

"Retirement benefits are the reward for years of labor and a foundation for a fresh start after retirement," said Ministry of Employment and Labor Minister Kim Young-hoon. "We will work together with retirement pension providers to prevent wage arrears and build a retirement pension ecosystem that balances stability and profitability, so that workers have greater freedom of choice."

FSS Governor Lee Chan-jin urged providers to "strengthen internal control systems befitting trustee responsibilities and work to establish a sound business order that puts subscribers' interests first, so that the fund-type retirement pension can take firm root."

The Ministry of Employment and Labor plans to introduce an amendment to the Act on the Guarantee of Workers' Retirement Benefits this month and push for its swift passage through the National Assembly.


rim@heraldcorp.com