Severance Packages Up to 500 Million Won and Tuition Support... LG Uplus Stumbles as Voluntary Retirement Hits Earnings

Third-Quarter Operating Profit Halved... One-Time Personnel Expenses Reach 150 Billion Won
Long-Term Cost Savings Expected, but Short-Term Burden Remains

LG Uplus has implemented a large-scale voluntary retirement program for the first time in about three years, making it inevitable that the company’s third-quarter results will take a significant hit. According to industry sources, the one-time personnel expenses resulting from this voluntary retirement are estimated to reach approximately 150 billion won.

IBK Investment & Securities recently estimated in a report that LG Uplus’s consolidated operating profit for the third quarter will remain at 135.8 billion won, a 44.8% decrease compared to the previous year. This figure is significantly below the market consensus of 217.2 billion won.

LG Uplus participated in 'YouTube FanFest Korea 2025' hosted by Google and showcased its self-developed AI service based on Ixi. LG Uplus

The main reason for this decline in performance is identified as the voluntary retirement of around 600 employees, which accounts for about 5.7% of the company’s total workforce. For this round of voluntary retirement, LG Uplus offered unprecedented terms, including severance packages ranging from 400 million to 500 million won and support for children’s tuition, targeting employees aged 50 or older with at least 10 years of service.

However, positive effects are also expected from a mid- to long-term perspective. Kim Taehyun, a researcher at IBK Investment & Securities, analyzed, “The annual reduction in personnel expenses due to the voluntary retirement is expected to reach 50 billion to 60 billion won. While this will be a burden on short-term performance, it will help improve profitability in the long run.”

LG Uplus is not alone in implementing voluntary retirement. LG Electronics and LG Display are also carrying out workforce restructuring targeting senior office workers. On October 16, LG Display announced the opening of applications for voluntary retirement for office staff, with applications set to begin on October 20. Employees with at least three years of service are eligible, and the package includes up to 36 months of base salary and support for children’s tuition, based on the remaining period until retirement age.

LG Display also conducted two rounds of voluntary retirement last year, reportedly reducing annual personnel expenses by more than 100 billion won at that time. The industry expects LG Display to likely return to annual profitability this year for the first time in four years.

LG Electronics is also carrying out voluntary retirement procedures for all business divisions for the first time in two years. This time, the program targets employees aged 50 or older, offering a severance package that includes up to three years’ annual salary and up to two years of children’s tuition support.

Meanwhile, KT, which implemented a similar workforce adjustment in the past, reflected 1 trillion won in personnel expenses in the fourth quarter of last year due to the voluntary retirement of 4,400 employees, resulting in a massive operating loss of 655.1 billion won. At that time, the average severance package per person was between 300 million and 400 million won.

Industry experts commented, “Given the high proportion of employees aged 50 or older in corporate structures, substantial compensation packages are unavoidable to encourage voluntary retirement. Similar forms of voluntary retirement are expected to continue as a solution to workforce bottlenecks caused by aging and increased life expectancy.”