SEJONG, Dec. 22 (Korea Bizwire) – Corporate retirement pension funds managed by South Korea’s financial institutions topped 145 trillion won (US$134 billion) last year, more than a decade after the country introduced the scheme, government data showed Friday.
The scheme introduced in 2005 aims to help fund retirees’ severance payments. Companies and employees make contributions to the pension funds, and employees can receive the pension after their retirement.
The South Korean government has been encouraging companies to adopt the retirement annuity program as part of efforts to help reduce the financial burden of severance payments, as well as allow employees to receive stable pension payments and higher retirement payments.
According to the data first compiled by Statistics Korea, the accumulated corporate retirement pension funds stood at 145.3 trillion won as of end-December, up 16.2 percent, or 20.3 trillion won from a year ago.
Out of 1.18 million businesses, 318,000 companies, or 26.9 percent, adopted the scheme for their employees last year.
About 5.44 million workers, or 50 percent of all 1.08 million employees, were covered by corporate pension programs last year, the data showed.