South Korea Proposes Private Pension Taxation Changes | Mercer

South Korea Proposes Private Pension Taxation Changes

Our Thinking / Law and Policy Group /

South Korea Proposes Private Pension Taxation Changes
South Korea Proposes Private Pension Taxation Changes
Calendar04 September 2019

The taxation of private pensions in South Korea would change under a bill (Korean) awaiting approval by the National Assembly but expected to take effect in February 2020.

Highlights

  • A lower tax ceiling for executives’ retirement income would treat amounts exceeding the ceiling as earned income subject to a higher income tax rate.
  • A tax credit would apply to individual savings account (ISA) deposits transferred to a pension account. An ISA deposit could be transferred on its expiration to a pension account, even if the amount exceeds the annual pension contribution cap (currently KRW 18 million). The tax credit would equal 10% of the transferred amount (up to KRW 3 million), provided that the transfer takes place within 60 days after the ISA’s expiration.
  • Individuals aged 50 years or older who earn up to KRW 120 million will receive an expanded tax credit on pension savings up to KRW 6 million (increased from KRW 4 million) or, if their individual pensions account is included, up to KRW 9 million (increased from KRW 7 million).
  • A reduced tax rate will apply to retirement income held as an annuity exceeding 10 years. For income withdrawn earlier than 10 years, the tax rate remains unchanged.

Related Resources

  Speak with a Mercer Consultant
Provide your contact information to get in touch
*Required Fields