The primary reason for the unclaimed pensions is that workers are unaware of their pension enrollment, especially when their employers go bankrupt or shut down. (Image courtesy of Pexels/CCL)
SEOUL, Mar. 5 (Korea Bizwire) –The South Korean government and financial institutions have initiated a campaign to assist employees in reclaiming unclaimed retirement pensions, which have accumulated to more than 110 billion won due to workers not claiming them.
As of the end of last year, the Ministry of Employment and Labor reported that unclaimed retirement pension funds from closed businesses amounted to 110.6 billion won, affecting 68,324 workers from 21,330 companies who have not collected their pensions.
The unclaimed pension funds exceeded 120 billion won at the end of 2021 and 2022, showing little sign of decrease.
The majority of the unclaimed funds, about 97.4% or 1.08 trillion won, are held by banks, with securities firms and insurance companies holding 16 billion won (1.5%) and 12 billion won (1.1%) respectively.
The primary reason for the unclaimed pensions is that workers are unaware of their pension enrollment, especially when their employers go bankrupt or shut down. Additionally, many are not aware that they can apply for their pensions directly from the financial institutions without needing a payment directive from their former employers.
To address this issue, the Ministry of Employment and Labor, the Financial Services Commission, the Financial Supervisory Service, and financial companies have agreed to enhance guidance and develop new inquiry services.
Currently, pension enrollees can use the Financial Supervisory Service’s Integrated Pension Portal site to check details like the financial company managing their funds, pension product names, and the amount saved.
For those with unclaimed funds, contacting the financial institution and submitting the necessary documents can release the funds.
Furthermore, the Korea Financial Telecommunications & Clearings Institute plans to introduce a system within the first half of the year that will allow users to check for unclaimed retirement pensions via the ‘Account Info’ mobile app.
Financial companies are also set to improve their services by the end of the year to provide tailored notifications to clients who are employees of closed businesses about their unclaimed pensions and the claim process, including options for non-face-to-face claims and receipts.
Ashley Song (ashley@koreabizwire.com)
