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www.groovekorea.com / March 2014 34 ABOuT ThE AuThOR Paul Sharkie is the Foreign Client Relationship Manager for Shinhan Bank’s Foreign Customer Department. Please visit Shinhan Expat Banking on Facebook for more information. The banking information provided in this column is based on Shinhan Bank policies and may not be applicable to all banks in Korea. — Ed. In Korea, a pension plan can be set up by one of three parties: you (through a private pension scheme), your employer or the state. For those unfamiliar with the specifics, deciphering a country’s pension terminology is often a hurdle for those just hoping to make ba- sic inquiries, not to mention trying to make the right decision regarding one’s own pension. One thing to note, however, is that in order to live a comfortable retirement, you will likely have to consider more than one option. This is Part II. Pensions: Defned beneft vs. defned contribution plan Last time, we looked at pension plans from a broader perspective. This month we’ll take a closer look at two of the most common types of pension plans on offer from your employer: defined benefit (DB) and defined contribution (DC). Defned beneft (DB) plans A defined benefit plan guarantees a certain payout at the time you, the employee, leave a company and/or w hen you retire. This payout is usually based on your salary and the number of years you’ve been under the plan. Contributions from your employer and (sometimes, but not always) yourself are invested in a fund that is regularly assessed to ensure it will meet its promised obligation. With DB plans, the investment risk is assumed by your sponsor/employer and not by you, the individual employee. Points to consider: • Many DB plans include early retirement provisions to encourage employees to retire early. But keep in mind that in such cases, the pay- ments you receive upon early retirement will often be reduced, since they will be spread over a longer period of time. • Employers or trustees make decisions about the type of benefits available, which ultimately affects the lifestyles of their employees. • Under DB plans, the employer typically tends to pay higher contri- butions. ThE MONEY COLuMN saying yes to the comPany Plan Make an informed decision about your employer’s pension offering Column by paul sharkie / Illustration by michael roy Edited by Matthew Lamers (mattlamers@groovekorea.com) INSIghT