Interim Payment of Retiring Allowance
Definition
- The 'interim payment of retiring allowance' is defined by paying a retiring allowance in advance, upon request by employees due to a valid ground for interm payment, in an amout calculated based on the continuous service period (the former part of Article 8(2) of the Act on the Guarantee of Workers’ Retirement Benefits).
※ Useful Tip before Applying for the Interim Payment of Retiring Allowance
Although an employee is entitled to a request for interim payment of retiring allowance on a valid ground therefor, it is recommended to make sure whether the employer will accept such request beforehand.
Valid grounds for the interim payment of retiring allowance
- Upon request by an employee due to any of the following grounds, the employer may pay his/her retiring allownace in advance prior to the retirement, in an amount calculated based on his/her continuous service period (the former part of Article 8(2) of the Act on the Guarantee of Workers’ Retirement Benefits; Article 3(1) of the Enforcement Decree thereof; and ‘Notice on the Use of a Retirement Pension Plan as Collateral, Acceptable Reasons and Required Conditions for the Interim Payment of Retirement Benefits, and the Maximum Value of Collateral’).
· Where an employee, who is non-homeowner, purchases a house in his/her name.
Q1. How can I be recognized as a non-homeowner and to have purchased a house?
A1. If you meet the following criteria, you can be recongized as a non-homeowner and an actual home purchaser (Ministry of Employment and Labor, page 1 of ‘Administrative Guidelines for the Interim Payment of Retirement Benefits’).
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Category
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Description
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Qualification as a non-homeowner
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A recipient of retirement benefits who does not own a home that is deeded or titled to him or her as of the date of application for the interim payment, even if another member of the household owns a home.
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Determination on home purchase
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▪ Eligibility is verified by checking whether or not the recipient of retirement benefits has a title to a home registered in his or her name. ▪ A home purchased jointly with a spouse is also considered an eligible purchase for the purpose of the interim payment of benefits.
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Q2. In the case where I recently sold the house that I previously owned in my name, can I be recognized as a non-homeowner?
A2. Even if you owned a house in the past, you can be recognized as a non-homeowner as long as you do not currently have any house owned in your name as of the date of application for interim payment (Ministry of Employment and Labor, page 2 of ‘Administrative Guidelines on the Interim Payment of Retirement Benefits’).
· Where an employee, who is a non-homeowner, pays a tenancy deposit pursuant to Article 303 of the Civll Act or a security deposit pursuant to Article 3-2 of the Housing Lease Protection Act, for the residential purpose (the number of such occurrences is limited to one time while the employee works in the same business).
Q1. Does the tenancy deposit or the security depost involve the deposit for a monthly rent?
A1. Both jeonsedeposits and security deposits on monthly rental homes are included in the scope of deposits referenced as “jeonse deposits on a home rented as a primary residence” under Article 303 of the Civil Code or as the “security deposit” under Article 3-2 of the Housing Lease Protection Act (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p3).
Q2. Can I apply for an interim payment of benefits when renewing an existing jeonse lease?
A2. As this provision is not limited to newjeonse leases, it is also applicable to cases where an existing lease is renewed or extended (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p5).
Q3. Am I still eligible for an interim payment of benefits if my spouse or some other member of my household is named as the tenant on the contract?
A3. The interim payment of benefits is toward the jeonse or security deposit that is personally paid by an employee covered by the retirement benefits program. Therefore, unless you are named as one of the tenants in the lease agreement, you are in principle not eligible to receive an interim payment.
However, if the home is jointly leased with a spouse, direct family member or a sibling who is the tenant on the contract, you can submit the evidence of residence in that home, for example, by reporting the address change to your local administrative office, after moving into the home. This is considered sufficient to establish the fact that you entered into a lease agreement on a property as a primary residence (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p5).
· Where an employee pays medical costs incurred for convalescence from illness or injury of any of the following persons, in which the convalescence period is more than six (6) months and the costs exceed 125/1000 of the total amount of wages per year:
√ Employee
√ Spouse of the employee
√ A dependent of the employee or his or her spouse
Q1. Who qualifies as dependents?
A1. ① Parents aged 60 years or older,② children up to the age of 20 years including adopted children who live with you, ③ siblings aged 20 years or younger, or aged 60 or older qualify as dependents. In this case, although the definition of dependents follows that set out under Article 40, Paragraph 1 of the Income Tax Act, income levels are not considered (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p5).
Q2. Does the period of convalescence or rehabilitation care include only the period of hospitalization?
A2. Convalescence or rehabilitation care means all necessary medical care a patient needs to reach a full recovery following an illness or injury. Therefore, the period during which outpatient care or home care is received is also considered as part of the period of convalescence or rehabilitation care, and not just the period of inpatient care at a hospital (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’p6).
· Where an employee was declared bankrupt pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years counting backward from the date of application for the interim settlement of retirement pay.
· When an employee was ordered to start personal bankruptcy rehabilitation proceedings pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years counting backward from the date of application for the interim payment of retirement pay.
Q1. Does a decision by the Credit Counseling and Recovery Service that I undergo debtor rehabilitation proceedings also qualify as a valid reason for applying for an interim payment?
A1. The debtor rehabilitation proceedings in this context refer only to the court-ordered proceedings pursuant to the Debtor Rehabilitation and Bankruptcy Act. Therefore, any decisions for a personal workout or pre-workout (pre-bankruptcy debt relief) by the Credit Counseling and Recovery Service, under its debtor rehabilitation program are not considered valid reasons for the interim payment of retirement benefits (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p8).
· Where an employer implements a program to reduce the wages of employees based on a particular age, the length of continuous employment or the amount of wage through a collective agreement, employment rules, etc. on the condition of extending or guaranteeing the current retirement age.
· Where the employer reduced an employee's contractual working hours by at least one (1) hour a day orfive (5) hours a week under the agreement with the employee, and the employee agreedto work for at least three (3) months based on the reduced contractual working hours.
· Where the contractual working hours at maximum is shorthened from sixty (60) hours to fifty-two (52) hours pursuant to the revision of the Labor Standards Act so that the amount of retiring allowance is likely to be reduced.
· In the case of a disaster under each subparagraph of Article 66 (1) of the 「Framework Act on Disaster and Safety Management」, and falls under any of the following:
√ Damage caused by loss, propagation, or half-breakdown of residential facilities in the disaster-affected area [In this case, residential facilities are dependents that share livelihoods with subscribers, spouses, and workers (including spouses) pursuant to Article 50 (1) 3 of the 「Income Tax Act」Limited to facilities where families reside]
√ In the case of a subscriber's spouse or dependents who make a living with the subscriber (including spouse) pursuant to Article 50 (1) 3 of the 「Income Tax Act」 are missing due to a disaster
√ When a subscriber suffers damage that requires more than 15 days of inpatient treatment due to a disaster
Application Period and Documentation Requirement
- For the purchase of a first home (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p2).
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Category
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Description
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Application period
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An application may be filed as early as on the day of the signing of the home purchase agreement and must be filed no later than a month after the transfer of the title.
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Documents required
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▪ Evidence establishing the status as a first-time home buyer √ Full transcript of resident registration in the town/ neighborhood of current residence. √ Full transcript of the property record or the building management ledger of the current residence. √ Certificate of property tax assessment (or non-assessment).
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▪ Proof of the purchase of a home: √ In the case of the purchase of an existing home, a copy of the property purchase agreement, and in the case where a new home is constructed, copies of a house plan and a construction agreement, etc. √ If the application is filed after the transfer of the house title, a transcript of the property record or building ledger of the new home.
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- For the rental of a primary residence for personal occupancy, requiring a jeonse deposit (security deposit) (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p4).
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Category
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Description
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Application period
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From the date of the signing of the home rental agreement to one month after the payment of the balance of the jeonse deposit remaining after the initial deposit.
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Documents required
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▪ Evidence establishing the existence of no other owned or rented residential property: √ Full transcript of resident registration in the town/ neighborhood of current residence. √ Full transcript of the property record or the building management ledger on the current residence. √ Certificate of property tax assessment (or non-assessment).
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▪ Evidence of the requirement of a jeonse or security deposit: √ A copy of the jeonse or lease agreement. √ If the application is filed after the jeonse deposit or security deposit is paid in full, a copy of the receipt of payment (the application must be filed no later than a month after the payment).
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- When the employee or his/her spouse or a dependent requires convalescence or rehabilitation care for a period of six months or longer (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p6).
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Category
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Description
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Application period
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▪ The application can be filed either while the care is received following an illness or injury or beforehand for the expected care. ▪ If the patient is no longer receiving the care, no later than a month from the last day of care.
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Documents required
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▪ Evidence of the care requirement: √A medical certificate, statement by the treating physician or the Certificate of Long-term Convalescence and Rehabilitation Care issued by the National Health Insurance Corporation that specifies the name of the illness, injury or condition and indicates the need for convalescence or rehabilitation care for at least six months. √ If the care has been fully completed, documents indicating the date of completion and evidence of payment of the cost of care.
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▪ Evidence of dependency: A Certificate of Family Relationship or other similar documents attesting to spousal relationship or to the fact that a family remember is a dependent living in the employee’s household.
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- When an enrollee was declared bankrupt by a court of law, pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years, counting from the date of application for interim payment (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p7).
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Category
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Description
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Application period
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When declared bankrupt within the five most recent years, counting from the date of application (the application must be filed while the bankruptcy status is still in effect) ※ If a decision of discharge or rehabilitation was issued, an application for interim payment can no longer be filed on account of bankruptcy, as this effectively terminates the bankruptcy status.
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Documents required
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Text of bankruptcy ruling by the court.
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- When an enrollee was ordered to start personal debtor rehabilitation proceedings, pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years, counting from the date of application for interim payment (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p7).
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Category
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Description
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Application period
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When declared bankrupt within the five most recent years, counting from the date of application for interim payment (the order to initiate personal debtor rehabilitation proceedings must be still in effect at the time of application): ※ If a decision to end the rehabilitation proceedings or a decision of discharge was issued, an application for interim payment can no longer be filed on account of rehabilitation proceedings, as this effectively voids the earlier decision by the court.
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Documents required
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The text of the court decision to initiate personal debtor rehabilitation proceedings or the affidavit of the approval of the personal debtor rehabilitation debt repayment plan.
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- When an employer implements a program to reduce the wages of employees starting at a certain age or a certain point in time during the period of employment in exchange for extending the retirement age or guaranteeing continuous employment until the retirement age, based on a collective agreement or the internal rules of employment (Ministry of Employment and Labor, ‘Administrative Guidelines on the Interim Payment of Retirement Benefits,’ p8):
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Category
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Description
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Application period
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In principle, on the day when the wage peak program enters into effect if the employee whose wage is affected by the program. ※ However, in the case where the employer and employees agreed on separate dates of application for interim payment, the application may be filed after the date of the entry into effect of the wage peak program, on these agreed-upon dates.
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Documents required
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▪ Documents indicating that a wage peak program is in place, such as the rules of employment or the collective agreement. ▪ Documents proving that the applicant is affected by the wage peak program, such as a copy of the employment contract (wage agreement) or paystubs.
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