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35 Defned contribution (DC) plans Under these plans, contributions are invested and the returns are credited to you. Upon retirement, your account is used to provide a lump sum and/or annuities. Unlike DB plans, here the investment risk and rewards are the responsibility of each individual employee or retiree, who will have to communicate with a service vendor (such as a bank) to manage their invest- ments. Advocates of this system point out that, in comparison to DB plans, each employee has considerable freedom to tailor their investment portfolio. Critics, however, point out that there are many workers who may not have the financial knowledge to select and manage their own investments. In addition, some may lack the discipline to make regular, voluntarily contributions to their funds, which are crucial to their growth. Defined contribution plans are now the dominant form of plan in the private sector in many countries, as they are more cost-effective for employers. Points to consider: • Participants who do not purchase annuities with their sav- ings (and instead take a lump sum) bear the risk of exhausting their assets; it is for this reason that now, in many countries, it is a legal requirement to use the bulk of the fund to purchase an annuity where regular payments are received over a long period of time. • Under DC plans, the contribution (funds invested by the em- ployer at regular intervals) is known, but the benefit (the final amount available to the employee at retirement) is unknown until the employee wants to utilize the assets. • Although the participant technically has control over invest- ment decisions, the plan sponsor retains a significant degree of legal responsibility over the plan, including the investment options and selecting administrative management. Benefts in Korea In Korea, the governing legislation is the Employee Retire- ment Benefit Security Act (2012), which has, among other actions, raised taxation on lump sum payments and lowered taxation on annuity payments. Given that Korea has an aging population, people will have to make their retirement funds last longer; short of raising the retirement age, making annuities a more attractive option is a good initial step for both individual and the state. Points to consider: • DB and DC plans are required for businesses with one or more employees. • Foreigners can invest in the same products as Korean na- tionals, although documentation is more likely to be done in Korean than in English. Therefore, do not invest in products that you do not know well. • Legislatively speaking, withdrawal from your plan (in Korea) is permitted under DC plans only when funds are required to purchase a house or when a dependent family member re- quires hospital treatment for an extended period of time. tip For more information on the most up-to-date governing legis- lation (in English), you should ask your employer or a service vendor. As always, this column is intended to act merely as a guide and professional advice should always be sought. Where my child’s smile is concerned, I want the best. Any father would feel the same. Pediatric dentistry & Orthodontics for all ages ExpEriEncE rEputation rEsults Give your children the smiles they deserve 71-9, Cheongdam-dong, Gangnam-gu, Seoul 서울특별시 강남구 청담동 71-9 청담 IVY 교정전문클리닉 www.ivysmile.kr 02.518.2722 U.S. Certifed Orthodontic Specialist Member of American Dental Association TRICARE Dental Program Preferred Provider Assistance with all dental insurance paperwork > Dr.Jay H Kim D.M.D., M.S. US-Trained and licensed dentist Member of American Dental Association > Dr. David John Choie D.M.D fnd us at FB “ivy dentalclinic” Chungdam IVY ORTHODONTICS VIPS HONDA Hotel Riviera COEX Sinsa Stn. Gangnam-gu Offce Line7 Cheongdam Stn. eXIT 12 IVY Dental Clinic