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Interest on severance
« on: March 02, 2020, 01:52:09 pm »
This is a new one for me.  Does our severance pay accrue interest?

Completely out of the blue today my CT tried to explain something that she admitted to not really understanding herself.  This is what I can remember of what she said and maybe someone will recognise it and can explain it to me haha.

She said something about my severance pay being in a very low interest bank account and that if I want to I can switch it to another account which will pay higher interest but with more risk.  She said something about this risky account being a "pension" which can't be right.

Any idea what this could be?  As far as I know we don't get severance + interest do we?


Re: Interest on severance
« Reply #1 on: March 02, 2020, 02:27:09 pm »
If the Severance, or wages, are unpaid then the Employer must pay simple interest at the rate of 20% per year, of 1.6% per month on the balanced that is owed.

Your Severance is due 14 days after your last day of Employment so if your Severance if more than 14 days late interest is owed.

Pension is not Severance.

Pension is managed by NPS, Severance is the Employers responsibility and is 30 days of Average Wage based upon the last three months of wages paid, including some from Bonuses, Unused Annual Leave and Overtime.  At a minimum Severance is 134% of monthly Salary, usually is it much higher than that because most people do not use their full annual leave.
Employers can put money into special accounts to help them save to pay out the Severance but the amount they earn in the account (i.e. if they loose money) is really their responsibility and not yours.

Severance payment is defined by the Labor Standards Act and is the sole liability of the Employer and is to be paid in full by the Employer.
Your Severance Payment only accrues Interest if your Severance is paid late.
The Employers Severance Fund accrues interest which is their beneficial interest and is not correlated to the amount you are to be paid.

Please note, if your signed up with the Teacher Union (I.e. a Professor at a Uni) Severance is handled differently due to the Union contract.
Cheers


  • oglop
  • The Legend

    • 3185

    • August 25, 2011, 07:24:54 pm
    • Seoul
Re: Interest on severance
« Reply #2 on: March 02, 2020, 07:03:27 pm »
i got a text message a few days ago, telling me my severance (with the exact number) is being held in a NH bank account. according to co-workers, i'll get quarterly updates about the balance. and the amount will be released when i finally leave employment with my school. i thought this was pretty cool. they should do this for all public schools.

..hm nothing to add to this topic really. just thought this was a cool and transparent way of doing things


  • confusedsafferinkorea
  • Waygook Lord

    • 5290

    • October 08, 2010, 01:02:32 pm
    • Zhubei, Hsinchu Province, Taiwan
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Re: Interest on severance
« Reply #3 on: March 02, 2020, 08:02:33 pm »
This is a new one for me.  Does our severance pay accrue interest?

Completely out of the blue today my CT tried to explain something that she admitted to not really understanding herself.  This is what I can remember of what she said and maybe someone will recognise it and can explain it to me haha.

She said something about my severance pay being in a very low interest bank account and that if I want to I can switch it to another account which will pay higher interest but with more risk.  She said something about this risky account being a "pension" which can't be right.

Any idea what this could be?  As far as I know we don't get severance + interest do we?

My school administrator tried this on me in 2014 and insisted it was the law that they transfer it to some obscure company in order to get a higher interest rate and that I would have to wait a couple of months past the end of my last contract to get it. They had a guy come in with all the glossy brochures  and put a lot of pressure on me to sign. I refused and said I need to contact SMOE about it first.

I contacted SMOE and asked if indeed it was a law and they said absolutely not. So, it was some company that were bribing the administrator to get the funds transferred into their account. I am pretty sure I would not have seen my money to this day had I signed on the dotted line.

I would be very cautious about this.
There is no known medical cure for stupidity!


Re: Interest on severance
« Reply #4 on: March 03, 2020, 09:07:10 am »
Yeah I just told my CT to keep it how it is and not change anything haha. 

Thanks for the replies everyone!