Even After Reduction, 'Top 1%'... Retirement Bonuses of 5 Major Banks Reach 500 Million Won Range

Reflecting Financial Authorities' Feedback, Expected Decrease of 30 Million Won
Even After Reduction, Top 1% Workers Far Exceed

This year, the severance pay that bank employees leaving commercial banks will receive is expected to reach an average of around 500 million KRW, surpassing the top 1% of workers' severance pay.

According to the "Compensation System Status Including Performance Bonuses of the 5 Major Banks" compiled by the Financial Services Commission, the average total severance pay per person at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?was approximately 540 million KRW as of 2022.

Employees leaving the banks received an average of 500 to 600 million KRW, including a special severance pay of 360 million KRW for voluntary retirement and a statutory basic severance pay of 180 million KRW based on years of service. Their average annual salary exceeds 100 million KRW.

This year’s severance pay is expected to decrease by about 30 million KRW compared to last year. According to financial authorities and each company on the 20th, commercial banks have adjusted downward the scale of voluntary retirement severance pay and performance bonuses compared to the previous year. This measure reflects the financial authorities’ recommendations.

Accordingly, the special severance pay for voluntary retirement decreased by 4 to 5 months per bank, from 24 to 36 months of the average monthly wage last year to 24 to 31 months this year. Performance bonuses were reduced from the 300% range to the 200% range, and the wage increase rate fell from 3% last year to 2% this year. However, even reflecting these changes, severance pay is expected to remain in the 500 million KRW range on average.

According to the National Tax Service, the average severance pay per worker for the 2021 tax year was about 15.01 million KRW. As of 2022, the average severance pay of these bank employees (540 million KRW) is 36 times the average.

Even considering the 4 to 5 months downward adjustment in voluntary retirement severance pay this year and wage increases due to inflation, the severance pay of commercial bank employees will significantly exceed the average severance pay of the top 1% of workers?33,045 people?with 407.44 million KRW.

Meanwhile, the number of retirees from commercial banks decreased compared to the previous year. The number of voluntary retirees at Kookmin Bank fell by 39, from 713 last year to 674. Nonghyup Bank saw a decrease of 121, from 493 to 372. Shinhan Bank’s voluntary retirees dropped by 154, from 388 at the beginning of last year to 234 at the beginning of this year.

Hana Bank and Woori Bank, whose retiree selections will conclude at the end of this month, are also expected to see a decrease compared to the previous year. This is analyzed to be influenced by the fact that the conditions for voluntary retirement were lowered compared to last year.