South Korea adjusts retirement policies on pensions and elderly employment

Retirees in South Korea are navigating complex financial landscapes due to disparities between public and private pension taxation and health insurance requirements. Currently, receiving more than 20 million won annually in public pensions can disqualify individuals from being dependents under a family member's workplace health insurance, leading to significant monthly premiums. In contrast, private pensions such as Individual Retirement Pensions (IRP) and pension savings are not currently factored into health insurance premium calculations, even for high earners.

The Ministry of Health and Welfare is considering reforms to include new income sources in the premium calculation system, with discussions scheduled for December. Meanwhile, the Board of Audit and Inspection noted that failing to levy premiums on private pensions resulted in approximately 38.4 billion won in lost revenue in 2020.

Separately, the government has implemented a differentiated subsidy system for companies that continue to employ elderly workers. Employers in non-metropolitan areas can receive 400,000 won per month per worker, while those in the Seoul metropolitan area receive 300,000 won. These subsidies are paid directly to the companies rather than the employees. While intended to encourage the retention of older workers, data shows a decline in participation among small businesses with fewer than 50 employees, often due to the administrative complexities of amending employment rules.