SOUTH KOREA: Employee Retirement Benefit Security Act (ERSA) and Employer governance requirements
National Assembly has approved the amendment of Employee Retirement Benefit Security Act (ERSA) on March 24, 2021.
The changes include the requirement of Structured Governance for DB Plans with more than 300 members.
The amendment of Employee Retirement Benefit Security Act (ERSA) was proposed in August 2020. The original bill included:
- Requirement of governance for DB plan
- Penalty fine for plan sponsors who did not resolve shortfall of DB plan asset
- Introduction of pension trust for smallsized enterprises
- Abolishment of Severance Pay Plan by mandatory conversion to ERSA-qualified Plan
Environment & Labor Committee (ELC) of Korean National Assembly provided conditional approval on the bill by postponing the decision on the abolishment of severance pay plan in February 2021. The bill was revised to exclude the “abolishment of severance pay plan” and received the final approval on March 24, 2021.
The effective date of changes is to be announced by Ministry of Employment & Labor in April 2021.
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