Korean Job Discussion Forums

[mindmetoo]

Our severance pay is based on a Korean law where companies have to pay all employees one month wage for every year worked. It's sometimes sold to us as a end of contract bonus etc.

That said, Korea is introducing a company pension plan system for, I believe, any company employing more than 5 people. The law was passed in 2005 and I think companies have to be up and running by 2010. So, a heads up to the newly arrived with plans on being a lifer.

Employees will be given the right to vote whether to a) retain the severance system (payable upon end of your employment) b) set up a system where the employer contributes about 8% of your pay to a pension fund managed by a third party institution (like a bank). Smaller companies will have some kind of roll over IRA.

How this will affect us if the Korean teachers vote to take the private pension plan system, I don't know. It's possible, like the national pension plan system, we'll be able to get the money placed into the plan. It's important to note this is not a payroll deduction but money outside of pay that the employer has to put into an account. Maybe schools will have some foreigner exception and continue with the end of contract severance payment. I've always felt, if the school is playing honest, this helps retain people and reduces the chances someone will leave after 10 months.

Indeed, given that few Korean teachers are lifers in a hagwon job and they're very young and would rather take the cash themselves, I doubt this will have any effect on all but the largest "salt mine" hagwons.

[Young FRANKenstein]

[mindmetoo]

[poet13]

Something doesn't make sense.
Pension is one thing. 9%.
Separation is another. About 8.3%.

Why would employees vote to receive less pension, and NO separation?
Or is this a second, separate pension scheme on top of the national plan in place?
I think there's either something missing, or I am not understanding your post.

[mindmetoo]

[the eye]

Correct me if i'm wrong, but most korean hogwan employees are hourly workers, and therefore are not eligible for national pension, severance, health care, and the like.

[xtchr]

[crazy_arcade]

I think, from what I understand, the year end "bonus" or "severance" pay is meant to be a type of pension pay. That's basically what the Korean translates to anyways. Essentially, it's supposed to be extra pay that you put away into a retirement fund or whatnot....or perhaps rainy day money or something such.

Anyways, we all know Koreans are good consumers, and it's likely that a lot of people don't keep a lot in retirement savings. I'd be willing to bet that a lot of "severance" payments get wasted away.

With changes in culture it is likely that less and less people are going to be able to depend on having their children take care of them after they retire. Therefore, it would make sense to create a more instituionalized system of the "severance" payments into a longterm pension or retirement system.

Just a hypothesis.

[ajuma]

OP, do you have a link (even a Korean one) that explains the change?

[mindmetoo]

[Hater Depot]

[mindmetoo]

Anyway, I think the long and short of it is this probably won't affect us in the hagwon industry. Those working in elementary/high schools might come up against this, although there might be a plan in place for public employees. I think this only applies to companies. But heads up if this does come across you desk, if you're going to be asked to vote on something sounding like this (ha, like we'll ever be asked).

[Missile Command Kid]

[Hater Depot]

Ah, ok.... my bad. But still, it seems to my reading of the law that they should be covered as long as they are working around 120 hours a month.

[mindmetoo]