KB Kookmin Bank will provide about 50 billion won in loans to small and medium-sized enterprises that newly introduce retirement pension plans to boost participation.

The support is part of a loan agreement for retirement plan activation signed in May by the Ministry of Employment and Labor, KB Kookmin Bank and Korea Credit Guarantee Fund.

Under the agreement, KB Kookmin Bank will contribute 1.6 billion won in special funds and 400 million won in guarantee fee support to the Korea Credit Guarantee Fund to offer roughly 50 billion won in guarantee-backed loans. Eligible firms are SMEs that introduced retirement plans on or after January 1 last year and have maintained them for at least one month. Firms that introduced plans more than a year earlier qualify only if they have made contributions.

The loans are provided through special contribution guarantee programmes and guarantee fee support programmes. Each company can receive up to 500 million won in guarantees.

Companies under the special contribution guarantee programme receive a 100 percent guarantee ratio for the first three years and a 0.3 percentage point discount on guarantee fees for three years. Firms under the guarantee fee support programme receive a total of 1.5 percentage points in fee support as the bank covers 0.5 percentage points a year for three years.

A KB Kookmin Bank official said the support is practical financial assistance to help SMEs introduce and operate retirement pension plans, adding that the bank will continue efforts with the public and private sectors to strengthen worker retirement security and expand retirement plan adoption.