Workers in workplaces with 4 workers or less can receive retirement benefits from December 1

From December 1, workers retiring from workplaces with four workers or less can receive retirement benefits.

* There are 963,366 workplaces ordinarily employing four workers or less, and 1,618,923 workers employed in such workplaces.

According to the Enforcement Decree of the Employee Retirement Benefit Security Act amended on September 29, 2010, the Retirement Benefit System expanded to cover workers in workplaces ordinarily employing four workers or less on December 1, 2010.

* The coverage of retirement benefits was extended from workplaces with 30 workers or more in 1961 to those with 16 workers or more in 1975, and then to those with five workers or more in 1989.

However, retirement benefits are paid to workers who have worked for at least one consecutive year. Therefore, actual payments are made on or after December 1, 2011 when one year has passed since the amendment came into effect.

The level of retirement benefits will stay at 50% of the statutory retirement pay of the worker concerned until December 31, 2012, and then be raised to 100% at the beginning of 2013.

This gradual increase in the level of benefits is intended to soften the impact on workplaces with four workers or less given their small business scale, their employers' weak ability to pay, and negative employment effects that might be caused.

Under the current law, an employer should introduce either the retirement pay system or a retirement pension plan (defined benefit type or defined contribution type).

In the case of workplaces with four workers or less, which tend to have a short cycle of creation and extinction and frequently delay payment of wages, introducing a retirement pension plan is desirable in terms of a stronger guarantee of workers' right to receive retirement benefits.

* Under a retirement pension plan, an employer puts aside contributions each year into an account at a financial institution, etc., outside the company, and retirement benefits are paid in a lump sum or in annuity payments if a worker retires. Retirement pension plans encourage workers' long consecutive service, and thus help to lower job separation rates and boost productivity.

Many workplaces with four workers or less are introducing a retirement pension plan to avoid the burden of raising a large sum of money temporarily to cover retirement payments. Retirement pension plans are well received by workers, resulting in fewer job separations and higher satisfaction.

* Among workplaces with four workers or less, 36,233 or 3.8% have adopted a retirement pension plan with a total of 98,088 workers covered.

MOEL has publicized the expansion of retirement benefits for workplaces with four workers or less through the mass media, such as radio campaigns, newspaper and subway ads, and surveys on social networking sites.

MOEL carries out publicity activities focused on policy target groups to ensure that no one fails to pay or receive retirement benefits because of his/her ignorance of the coverage expansion. For instance, it develops and distributes related posters and leaflets, sends direct mail to all workplaces employing four workers or less, informs target groups of the institutional change in collaboration with industry- or regional-level associations of small business owners, and operates a relevant PR booth at job fairs.

Park Jong-gil, the Director-General of the Working Conditions Improvement Bureau, said "Now that retirement benefits have been expanded to cover workplaces with four workers or less, they will greatly contribute to promoting the welfare of workers in these workplaces by helping them to provide for their retirement."

He also said, "In light of their small business scale and relatively weak ability to pay, many workplaces with four workers or less would fail to pay retirement benefits on time. So we will conduct thorough guidance and inspection activities


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