Use of the Retirement Pension Plan as Collateral for Loans and Early Withdrawal therefrom
Loans secured against retirement allowance- An employer as a pension holder is entitled to using 50/100 of his/herreserves as collateral for loans if the following reasons and conditions are satisfied.In this case, the employer [as for an SME retirement pension fund plan, it refers to theKorea Workers' Compensation & Welfare Service under Article 10 of theIndustrial Accident Compensation Insurance Act] is required to help the employee to take a loan securedagainst his/her benefits (Article 7(2) of the Act on the Guarantee of Employees’Retirement Benefits; Article 2 of the Enforcement Decree thereof; and the Noticeon the Use of a Retirement Pension Plan as Collateral, Acceptable Reasons and RequiredConditions for the Interim Payment of Retirement Benefits, and the Maximum Valueof Collateral).
· Where an employee who has never owned a house purchases a house in his/her name.
· Where an employee, who is a non-homeowner, pays a tenancy(or Jeonse) deposit pursuant to Article 303 of the Civil Code 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.
· Where an employee pays medical costs incurred for at least six months of convalescence from illness or injury of any of the following persons under Article 118-5 (1) and (2) of the Enforcement Decree of the Income Tax Act:
√ The employee himself/herself
√ The spouse of the employee concerned
√ The dependents of the employee concerned or his/her spouse (Dependents pursuant to subparagraph 3 of Article 50(1) of the Income Tax Act)
· Where an employee has been declared bankrupt pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years counting backward from the date of offering collateral.
· Where an employee has been ordered to begin personal bankruptcy rehabilitation proceedings pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years counting backward from the date of offering collateral.
· Where an employee pays wedding costs, funeral costs or college tuitions of any of the following persons:
√ Employee himself/herself
√ The spouse of the employee concerned
√ The dependent of the employee concerned or his or her spouse
· Where employees' wages have been decreased as follows due to the employer's suspension of business
√ Where the monthly wage (referring to the amount of sales for a self-employed person pursuant to subparagraph 1 of Article 17(1) of「Enforcement Decree of the Workers' Retirement Benefit Guarantee Act) for a month ("base month") during the period of the business suspension has been decreased by 30/100 or more, compared with the monthly wage or the average wages for three months paid in the month immediately preceding the month when the business suspension began.
√ When the wage of the base month has decreased by 30/100 or more, compared with the average monthly wage of the year immediately preceding the year to which the base month belongs.
· Where a disaster under each subparagraph of Article 66 (1) of the Framework Act on Disaster and Safety Management occurs.
√ Where the residential facilities in the disaster-affected area, which are limited to the facilities where the employee concerned resides with his/her spouse or dependents pursuant to subparagraph 3 of Article 50(1) of the Income Tax Act (including the dependents of the spouse), has been swept away or fully or partially destroyed.
√ Where the spouse of the employee concerned or the dependents pursuant to subparagraph 3 of Article 50(1) of the Income Tax Act (including the spouse's dependents), with whom the employee concerned lives together, are missing due to a disaster.
√ When an employee concerned suffers damage that requires more than 15 days of inpatient treatment due to a disaster
Early Withdrawal from the Retirement Plans- An employee who is a defined contribution pension plan holder is allowed to make an early withdrawal of the reserves under the following circumstances (Article 22 of the Act on the Guarantee of Workers’ Retirement Benefits and Article 14 of the Enforcement Decree thereof):
· Where an employee who has never owned a house purchases a house in his/her name.
· Where an employee, who is a non-homeowner, pays a tenancy(or Jeonse) deposit pursuant to Article 303 of the Civil Code 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.
· Where a disaster under each subparagraph of Article 66 (1) of the Framework Act on Disaster and Safety Management occurs.
√ Where the residential facilities in the disaster-affected area, which are limited to the facilities where the employee concerned resides with his/her spouse or dependents pursuant to subparagraph 3 of Article 50(1) of the Income Tax Act (including the dependents of his/her spouse), has been swept away or fully or partially destroyed.
√ Where the spouse of the employee concerned or the dependents pursuant to subparagraph 3 of Article 50(1) of the Income Tax Act (including the spouse's dependents), with whom the employee concerned lives together, are missing due to a disaster.
√ Where an employee concerned suffers damage that requires more than 15 days of inpatient treatment due to a disaster
· Where an employee pays medical costs incurred for at least six months of convalescence from illness or injury of any of the following persons, provided that the medical costs exceed 125/1000 of his/her total annual income.
√ Employee himself/herself
√ The spouse of the employee concerned
√ The dependent of the employee concerned or his or her spouse
· Where an employee has been declared bankrupt pursuant to the Debtor Rehabilitation and Bankruptcy Act, within the five most recent years counting backward from the date of application for an early withdrawal.
· Where an employee has been 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 an early withdrawal.
· Where an employee repays the principal and the interests of his/her loan secured against benefits as one of the reasonable grounds determined and notified by the Minister of Employment and Labor.
※ In the case of withdrawal of the reserve due to the above reasons, the withdrawal amount shall be less than the amount necessary to repay the principal and interest of the loan