After identifying the type of retirement pension your employer offers, the next step is to find out when you can participate and receive benefits. Retirement pension plans can operate in various ways within the legally permitted scope. Detailed information about each retirement pension plan can be found in the Plan Summary, where you can understand the participation conditions and benefits. It may take some time for benefits to be paid regularly, which is also referred to as the pension period.

Who can contribute to the retirement pension?

It is also important to check if there are employees enrolled in the retirement pension offered by the employer. Employers may provide retirement pensions only to selected employees. For example, some employers may distinguish between union retirement pensions and those for regular employees. Part-time workers must work at least 1,000 hours per year or more than 20 hours per week to be eligible for the retirement pension. If you are a part-time worker, you should confirm in advance whether this benefit is guaranteed.

When can you participate in the retirement pension?

If you are eligible to enroll in the retirement pension, the next step is to find out when you can start contributing. This information can be found in the Plan Summary of the chosen retirement pension plan. There are legal minimum requirements, but some retirement pension plans may offer more benefits. Most retirement pension plans require you to be at least 21 years old and have worked for at least one year to qualify for enrollment. However, some retirement pension plans may provide benefits to employees with less than one year of service or under 21 years of age. Depending on the employer's management policy, retirement pension eligibility may begin after a 6-month waiting period following enrollment or from the time you turn 21. It is advisable to check this in advance as it may vary according to the employer's retirement pension plan.

How are retirement pension contributions handled?

Once you enroll in a retirement pension, it is important to understand how benefits accumulate. Accumulated benefits refer to the total amount of benefits accrued during your employment before retirement.

  • Defined Benefit Plan applies the years of service to determine the total retirement pension amount. Part-time workers who work more than 1,000 hours per year can receive the same benefits as full-time employees.
  • Defined Contribution Plan refers to the benefits accumulated in a 401(k) or chosen retirement pension account. This includes amounts excluding fees.

Some retirement pensions may have special accumulation benefit regulations. For example, in a Simplified Employee Pension Plan (SEP), employers must contribute for individuals earning at least $650 annually.

Can already guaranteed benefits be reduced?

Defined Benefit Plans can change the amount based on future earnings, but there will be no deductions from already paid benefits. For example, benefits accumulated at $5 per month in 2021 may be reduced to $4 per month starting in 2022. In case of such significant changes, participants in the retirement pension plan will be notified at least 45 days in advance.

In most cases, if the amount contributed by the employee to the retirement pension plan is insufficient to receive retirement benefits, the Pension Benefit Guaranty Corporation (PBGC) will cover the shortfall, but it may not reach the guaranteed maximum amount.

In Defined Contribution Plans, employees can freely adjust the amount they contribute. Additionally, there may be cases where support is not received for a certain period or is permanently discontinued. Employers can terminate either Defined Benefit or Defined Contribution Plans, but they cannot reduce or deduct already accumulated benefits.

When do accumulated benefits actually take effect?

All employees contribute a certain amount to the retirement pension each time they receive a paycheck. In this case, retirement pension contributions have begun, and there is no risk of missing or losing the contribution amount. However, there may be restrictions on withdrawing this amount from the retirement pension. This will be discussed in detail in subsequent explanations.

However, rights to the amounts contributed by the employer do not accrue immediately. According to the constitution, employees are entitled to retirement pensions and benefit support based on the maximum years of service worked at that job. For example, to receive 100% of the employer-contributed Defined Benefit Plan, you may need to work for at least 5 years. Employers may require a 7-year service period, and there may be a contribution year split payment method (e.g., 20% after 3 years, 30% after 4 years, 60% after 5 years, 80% after 6 years).

Defined Contribution Plans (e.g., 401(k) plans) allow employees to receive 100% of the amounts they contributed and the resulting future earnings. However, most Defined Contribution Plans require employees to work for several years before receiving the employer's matching contributions.

Retirement pension receipt criteria

Generally, employers must include the employee's first day of work in the calculation of years of service. However, there are two exceptions:

  1. If the employee was under 18 years old when they started working and later turned 18
  2. If the employee voluntarily participated in the 401(k) plan and did not contribute

For detailed policies regarding retirement pension receipt, you can contact the company's retirement pension administrator.