A Case of Advising on Calculation of Employer Contributions for Past Service Periods Under a Retirement Pension and Review of Additional Contribution Risk

1. The Client's Situation

The client operated a retirement pension scheme for its executives and employees, but internally there was confusion regarding the method of calculating the employer's contributions for the period of past service prior to the time of enrollment in the retirement pension, and the timing of payment. In particular, because the date of hire, the date of enrollment in the retirement pension, and the wage structure differed between executives and ordinary employees, there was a problem that the contribution calculation results could vary greatly from individual to individual. In the case of some employees, the contributions for the period of past service had not been paid in a timely manner, raising concerns about the possibility of additional payments and the accrual of late-payment interest. Accordingly, the client requested advice on the precise calculation standards under the retirement pension rules and the scope of legal risk.

Your Legal Team reviewed, on the basis of the structure for calculating the employer's contributions for the period of past service under the retirement pension rules, which of the "method based on total wages" and the "method based on 30 days' worth of average wages" applied, distinguishing this on an employee-by-employee basis. In addition, focusing on the time of acquisition of qualification as a retirement pension subscriber and the time when the past service period was decided to be included in the enrollment period, we clearly organized the timing at which the obligation to pay contributions arises. Furthermore, where some amounts had already been paid, we reflected these as contributions already paid, and reviewed, with respect to the unpaid amounts, whether and to what extent late-payment interest would accrue under the rules. Through this, we provided advice centered not on simple calculation errors, but on the structural risk arising from the interpretation and order of application of the rules.

On the basis of the advice, the client was able to determine in advance the precise additional payment amounts of the employer's retirement pension contributions for each executive and employee, and also came to clearly recognize the scope of late-payment interest accrual. Through this, it was able to secure the legal stability of operating the retirement pension scheme while minimizing the possibility of future employee disputes or supervisory-authority findings. Furthermore, it achieved the result of laying the foundation for revising internal calculation standards and improving the management system in order to prevent the risk of additional non-payment of the same structure.