Retirement Age Expanded to 30s... Increase in Applicants
Severance Pay for Commercial Bank Employees Significantly Exceeds Worker Average
Major domestic banks have begun actively implementing voluntary retirement programs that started at the end of last year. In particular, although severance pay has decreased due to the expansion of eligible retirees to those in their 30s, the number of applicants has increased.
According to the financial sector on the 5th, following KB Kookmin Bank, NH Nonghyup Bank, and Shinhan Bank, Hana Bank and Woori Bank began accepting voluntary retirement applications yesterday.
NH Nonghyup Bank was the first among commercial banks to start and complete the voluntary retirement program. In November last year, employees aged 40 to 56 with more than 10 years of service were eligible, and severance pay was provided at a maximum of 20 to 28 months' salary depending on age. This condition was maintained at last year's level.
Shinhan Bank accepted voluntary retirement applications from the 13th to the 17th of last month. The retirement implementation date is January 2. Notably, this year, the eligibility was expanded from those aged 44 and above last year to include employees in their 30s. As a result, 534 employees aged 38 and above applied for voluntary retirement, and special severance pay equivalent to 7 to 31 months of the average monthly salary is paid depending on the year of birth.
KB Kookmin Bank has been accepting voluntary retirement applications since the 16th of last year. This year, the eligible age was expanded to those born in 1974, and severance pay remains the same as last year, ranging from 18 to 31 months' salary. Additionally, benefits such as children's tuition fees and reemployment support funds are provided.
Hana Bank is accepting applications for special quasi-retirement from the 2nd to the 6th. Eligibility requires employees to be at least 40 years old with more than 15 years of service as of January 31, 2024. Retirees receive special severance pay of up to 24 to 31 months' average salary depending on age. This is the same condition as the voluntary retirement program conducted earlier last year.
For those born in the second half of 1969 through 1972, additional benefits such as children's tuition fees, medical expenses, and job transition support funds are provided beyond the special severance pay. The wage peak special retirement, conducted twice a year, is also targeted at employees born in the first half of 1969. Approximately 25 months' average salary (differentiated by birth month) is set as special severance pay.
Woori Bank is also accepting voluntary retirement applications until the 7th for employees who have worked for more than 10 years after joining as regular employees.
Once retirement is confirmed, employees born in 1969 receive special severance pay equivalent to 19 months of average salary, and those born after 1970 receive 31 months. Additional benefits such as children's college tuition, reemployment support funds, and health checkup expenses are also provided, similar to last year.
According to the 'Status of Compensation Systems Including Bonuses at the Five 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.
The National Tax Service reported that the average severance pay per worker for the 2021 tax year was about 15.01 million KRW. Compared to this, the average severance pay of these banks (540 million KRW in 2022) is 36 times higher than the average.
Even considering the 4 to 5 months reduction in voluntary retirement pay this year and wage increases due to inflation, the severance pay of commercial bank employees significantly exceeds the average severance pay (407.44 million KRW) of the top 1% of workers, numbering 33,045.
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