Retirement Plans
Method of Payment of Lump-sumRetirement Benefits
Calculation of lump-sum retirement benefits and period covered
- The employer must issue lump-sum benefits in amount at least equal to 30 days’ average wage for every year of continuous employment to a retiring employee (Act on the Guarantee of Workers’ Retirement Benefits, Article 8, Paragraph 1, Item 4; Labor StandardsAct, Article 2, Paragraph 1, Item 6 and Paragraph 2).
· The ‘average wage’ means the total amount of wages paid to the employee during the overall period of employment until three months prior to the triggering event that necessitated the calculation, dividedby the total number of days in this period.
· If the average wage so calculated is smaller in amount than the employee’s ordinary wage, the ordinary wage is considered the average wage.


Lump-sum retirement benefits = daily average wage × 30 days × (total number of days of continuous employment ÷ 365)


- Upon the retirement of an employee, the employermust pay retirement benefits within 14 days from the date of retirement (if thisdeadline cannot be met due to special circumstances, the employer and the employeemay agree upon a later date) (Article 9(1) of the Act on the Guarantee of Employees’ Retirement Benefits).
-The above retirement benefits shall be paid by transferring them to the accountof the individual retirement pension plan designated by the worker or to theaccount under Article 23-8 of the Act on the Guarantee of Employees' RetirementBenefits (the main text of Article 9(2) of the Act on the Guarantee ofEmployees' Retirement Benefits).
※ However, this shall not be the case under the following circumstances(proviso to Article 9(2) of the Act on the Guarantee of Employees' RetirementBenefits and Article 3-2 of the Enforcement Decree thereof).
√ Where a worker retires after the age of 55 and receives benefits;
√ Where the salary is less than the amount determined and notified by the Minister of Employment and Labor;
√ Where the worker dies;
√ Where a retired worker who has provided labor services in Korea with a status of stay that allows him/her to be employed under Article 23(1) of the Enforcement Decree of the Immigration Act leaves the country after retirement;
√ Where other laws and regulations require that all or part of the salary be deducted.
Calculating lump-sum retirement benefits for employees having taken parental leaves, etc.
- If any leaves before and after childbirth, miscarriage/stillbirth leave, or child-care leave were taken during the period of employment, based on which the average wage is calculated, the lengths of such leaves and wages paid during the leaves must be excluded from the base period of employment and total wage for the purpose of this calculation (subparagraphs 3 and 5 of Article 2(1) of the Enforcement Decree of the Labor Standards Act).
- For the calculation of the average wage, pursuant to Article 2, Item 6 of the Labor Standards Act, for employees who opted for shorter work hours for the care of an infant or toddler, any period during which they worked according to a part-time schedule is excluded from the base period for this calculation (Act on Equal Employment and Supportfor Work-Family Reconciliation, Article 19-3, Paragraph 4).