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Photo courtesy of Yuanta Securities |
[Alpha Biz= Kim Jisun] Yuanta Securities has been found to be the only retirement pension provider in Korea still operating a traditional severance pay system, under which employees receive their severance benefits as a lump-sum payment upon retirement.
According to the financial investment industry on the 21st, among the 45 banks, insurers, and securities firms registered as retirement pension providers, Yuanta Securities is the sole company maintaining the severance pay system. Under this system, upon retirement, the company pays employees a lump-sum amount equivalent to at least 30 days’ average wages for each year of continuous service.
As of the end of the first half of this year, Yuanta Securities’ defined benefit (DB) obligation stood at KRW 160 billion, representing the present value of severance payments owed to employees currently in service. This is a 7.5% increase from KRW 148.8 billion at the end of last year.
In contrast, the externally funded assets set aside through retirement pension plans to partially cover obligations for some employees totaled only KRW 8.1 billion, accounting for about 5% of total DB obligations.
This figure fell by KRW 400 million compared with the end of last year. Moreover, about 80% of the externally funded assets are held in deposits, emphasizing principal protection over investment returns. This imbalance shows that while DB obligations are rising, external reserves remain stagnant, leaving the lump-sum payment structure largely intact.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
