Seoul:South Korea plans to require businesses with 100 or more employees to deposit funds for severance payments with external financial institutions starting in 2028, as part of efforts to prevent nonpayment, the finance ministry announced on Wednesday.
According to Yonhap News Agency, the Ministry of Finance and Economy discussed the initiative during a meeting with economy- and science-related ministers. The goal is for businesses to start preparations in 2027 for full implementation the following year. The finance ministry emphasized that depositing severance funds with external institutions is the most effective way to address issues related to nonpayment.
The ministry highlighted that professional asset management could improve investment returns and protect workers' rights by clearly defining the responsibilities of fund operators. Finance Minister Lee Hyoung-il stated that the labor ministry and financial authorities would collaborate to ensure the stable management of these funds.
Minister Lee also mentioned that the government would work closely with the National Assembly to expedite legislative procedures and necessary follow-up measures. During the meeting, he underscored the importance of continued efforts to address disparities across various areas, leveraging the country’s economic growth. Lee remarked that the ultimate goal of economic growth is to enhance people's quality of life and that addressing disparities is essential for achieving growth for all.