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Retirement Pension-related Taxes

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Retirement pension taxation system

Taxation will be deferred at the accumulation and operational stages, and executed at the withdrawal stage.
For operational returns: Retirement income tax, pension income tax, and other income tax shall be applied based on type of receipt, regardless of whether they are interest or dividend income.

  1. Accumulation Stage
    • Income Source
    • Employer’s Contributions Deferment of Taxes
    • Employee’s Contributions Tax deduction of up to KRW 9 mil per year
      Pension savings (0~600) + Retirement pension (0~900)
      = Up to KRW 9 mil per year
  2. Operational Stage
    • Income Source
    • Operational Returns
      Operation can proceed with various products including beneficiary certificate and time deposit
      Deferment of Taxes
    • Operational Returns
      Operation can proceed with various products including beneficiary certificate and time deposit
      Deferment of Taxes
  3. Receipt Stage
    • Lump-sum receipt
      (including early withdrawal)
      • Income Source
      • Employer’s Contributions
        Operational Returns         Retirement Income Tax
      • Contributions for which tax deduction was not made Not subject to taxation (Prevention of double taxation)
      • Contributions for which tax deduction was made, Operational returns Other income tax (16.5% separate taxation)
    • Receipt of Pension
      • Income Source
      • Employer’s Contributions
        Operational Returns         Pension income tax (Separate taxation for 70% of pension income tax)
      • Contributions for which tax deduction was not made Excluded from taxation (Prevention of double taxation)
      • Contributions for which tax deduction was made, Operational returns Retirement Income Taxation(Subject to global taxation if annual pension annuity exceeds 15 mill KRW, however the rate of 16.5% can be applied if chosen)

Use of IRP

(퇴직소득세 포함 과세이연)퇴직금과 불입시 세액공제혜택(연금저축합산 최대 연700만원)개인부담금은 개인형IRP가 됩니다.
개인형IRP
  • 일시금(연금 외 수령)
    개인형IRP활용
    재원 과세 비고
    퇴직금 퇴직소득세100%(할인없음) 분류과세
    개인부담금 및 운용수익 기타소득세16.5%(분리과세) 분리과세
  • 연금수령
    개인형IRP활용
    재원 과세 비고
    퇴직금 연금소득 : 퇴직소득세의 70% 퇴직소득세의 30% 절세 분리과세
    개인부담금 및 운용수익 연금소득 : 5.5~3.3% 원천징수 사적연금 연 1200만원 초과시 종합과세

＊ 세금공제 받지 않은 개인부담금은 과세 제외됩니다.

  • 연금수령요건 : 만 55세 이상(연금수령 원하시는 시점에 가까운 영업점 방문)
  • 연금수령기간 : 연금계좌 최초가입일이 2013. 3.1 이전인 경우 5년/이후인 경우 10년
  • 연금인출순서 : 퇴직금원금 → 운용수익

Example
Retirement benefits of KRW 300 mil / Retirement income tax of KRW 20 mil / Local tax of KRW 2 mil (퇴직소득만 존재가정)

- In case of a lump-sum receipt : KRW 300 mil ~ 22 mil (Retirement income tax 100%) = KRW 278 mil

- In case of receipt of pension

When assuming returns are 1.5%

연금수령 예시
Annual average amount received (after taxes) Total amount received
(before taxes)		 Pension income tax Total amount received
(after taxes)
5-year receipt 58,549,770 308,622,383 15,873,490 292,748,890
10-year receipt 30,116,010 317,522,545 16,362,420 301,160,125

When assuming returns are 3.0%

연금수령 예시
Annual average amount received (after taxes) Total amount received
(before taxes)		 Pension income tax Total amount received
(after taxes)
5-year receipt 60,875,270원 320,926,846원 16,550,490원 304,376,356원
10-year receipt 32,574,410원 343,537,766원 17,793,610원 325,744,156원
  • Composition of pension income tax ①+②
    • ① Pension income tax for the financial resources of retirement benefits: (KRW 22 mil) x 70% = 15,400 (Same regardless of period of pension receipt)
    • ② Pension income tax for operational returns (5.5% ~ 3.3% depending on age)
  • Actual amount paid may vary depending on operational returns during period of receipt, timing when pension is requested, fee rate policy, pension receipt limit, etc.