Retirement Pension Plan (RPP) Adoption and Operation Procedures
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STEP 01
- Determine whether to adopt a retirement pension plan (RPP)
- The employer and employees’ representatives agree on RPP implementation and its type.
* Adopt a suitable system : Defined benefit(DB), Defined contribution(DC)
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STEP 02
- Devise RPP rules
- The RPP rules include the outline of the employer’s reserve contributions and employees’ retirement benefits.
* The RPP rules should be reported to the Ministry of Employment and Labor after obtaining the agreement of employees’ representatives.
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STEP 03
- Select a financial institution for RPP
- RPP operators refer to financial institutions that are qualified for RPP due to financial soundness, etc., and that are approved as such by the FSC.
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STEP 04
- Conclude an agreement with the financial institution
- RPP services are classified into investment management and asset management.
- · Investment management : Propose investment methods, plan pensions, and record/keep/provide investment results
- · Asset management : Set an account, receive the reserve, pay benefits, and implement investment instructions
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STEP 05
- Pay reserve contributions
- The defined benefit system requires the employer(company) to each year reserve its contributions calculated through the accounting method.
- The defined contribution system requires that, each year, over 1/12 of total wage should be reserved per employee.
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STEP 06
- Give investment instructions on the reserve
- Under the defined benefit system, the employer (company) selects investment products and give instructions. Under the defined contribution system, the employee selects investment products and give instructions.
* Info on investment products: Deposits/installment savings with a bank, state bonds, listed stocks (limited to DB, beneficiary certificates (bond type, bond-mixed type, and stock type), etc.
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STEP 07
- Pay retirement allowances
- Retirement allowance will paid as a pension or a lump-sum money.
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STEP 08
- Notify and educate about investment overview
- The employer should inform the subscribers of the reserve amount and returns on investment once or more each year. The employer should also give education about the operation overview of RPP to the subscribers once or more each year. (This job can be commissioned to the RPP operator)
