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SEMA Payroll Savings Plan

SEMA Payroll Savings Plan

SEMA Payroll Savings Plan offers a safe and simple way to grow monthly savings at a competitive interest rate. It is a long-term savings product that allows our members to make monthly deposits via payroll deduction. After retirement, they receive benefits as a monthly pension or lump sum.


Eligibility

  • - Employees and executives of membership-eligible (under Article 6 of Korea Scientists and Engineers Mutual-Aid Association Act) science and technology-related organizations and members of professional engineers’ association
  • - Business agreement between SEMA and the organizations is required for their employees to enroll in the plan

Payment Rate: 3.52 % annual compound rate (floating rate, as of July 1, 2020)

  • - Payment rate is annually adjusted to be 1.5% ~ 2% higher than the reference benchmark rate (committee for payment rate adjustment
    the Board of Representatives)
  • - Reference benchmark rate: the three-month average yield of a five-year treasury bond

Enrollment Period: from the day of enrollment to the day of retirement


Enrollment Amount: minimum 5 accounts to maximum 200 accounts (in increment in 5 accounts; 1 account = KRW 10,000)


Deposit Payment

  • - Employer deducts the employees’ contributions from their salaries and transfers the contributions to SEMA on every payday.
  • - If employers cannot deduct from employees’ salaries due to the reason such as unpaid leave, the contributions could be deferred or deposited separately on the payday.
  • - Members of professional engineers’ association transfer their contributions through CMS of KFTC (Korea Financial Telecommunications & Clearings Institute) on the 10th (the first payment date) and the 15th (the second payment date) of each month.

Tax Benefit

Tax Benefit
Income Tax Comprehensive Financial Income Tax
SEMA Payroll Savings Plan Taxed at a low rate of 0 - 4 %
(eligible for Special Case concerning Calculations of Tax on Excess Repayment from Workplace Mutual-Aid Association under Article 63 of the Income Tax Act)
Not subject to Comprehensive Financial Income Tax
(Article 3, 3 of Income Tax Act)

* If members receive benefits as an annuity, the same tax benefit will be applied to interest accrued after retirement date; if they receive benefits as a lump sum, general tax 15. 4% will be applied to interest accrued after the retirement date.


Enrollment Procedure

  • - After signing an agreement with membership-eligible organizations, employees of the organization can apply for the plan online or offline.
  • - To enroll in the plan, an initial deposit should be made and the related transaction process should be completed


Receiving Benefit

  • - Selecting Benefit Payment Option: select from a lump sum; an annuity; partial lump sum and an annuity.

    • If members want to choose an annuity payment, their accumulated savings (principal + cumulative interest) should be at least KRW 10 million.

    • If members select an annuity payment, they can specify the payment starting date (after 55 years of age), payment period, payment frequency. Their payment options can be changed during the payment waiting period.

    • If members select lump sum payment, interest is calculated with the contracted payment rate until the retirement date; after the retirement date, they will receive interest for up to 14 days

    • If there is a remaining balance of savings secured loan, the remaining savings amount after paying off the loan balance will be paid in a lump sum or an annuity.


Early Termination Payment

  • - Early Termination: If the plan is terminated before the retirement date, early termination payment will be made (only lump sum payment is available; partial termination is not allowed).
Tax Benefit
Contract period Less than 1 year 1 year or more and less than 3 years 3 years or more and less than 5 years 5 years or more and less than 7 years 7 years or more and less than 10 years 10 years or more
Early termination payment Total principal deposited and 20% of accrued interest Total principal deposited and 30% of accrued interest Total principal deposited and 40% of accrued interest Total principal deposited and 60% of accrued interest Total principal deposited and 80% of accrued interest Total principal deposited and accrued interest

Amending Plan Conditions

  • - Increase or Decrease of Accounts: available to change in increment/decrement of 5 accounts from minimum 5 accounts to maximum 200 accounts.
    * Plan conditions can be amended after three months (three deposits are made) from the enrollment or initial increase/decrease of accounts.
  • - Leave of Absence/Returning to Work: if the salary cannot be deducted during an unpaid leave of absence (labor dispatch), payment of the deposit can be deferred or made individually.
  • - Carrying on with Existing Plan: when employees move to another institutional member that has SEMA Payroll Savings Plan agreement with SEMA, they can carry on with the existing plan if they request to do so within six months of the employment date.