Private Pension Separate Taxation Threshold Expanded from 12 Million to 24 Million Won... People Power Party's Lee Inseon Proposes Legal Amendment

by Gu Daeseon

Published 10 Apr.2023 10:30(KST)

Updated 07 Aug.2025 16:28(KST)

Lee In-seon, a member of the People Power Party representing Daegu Suseong, has proposed a bill to raise the threshold for separate taxation on private pension income from 12 million KRW to 24 million KRW per year.

On the 7th, Lee introduced the "Partial Amendment to the Income Tax Act" as the main proposer to reduce the burden on elderly households living on pension income and to promote the expansion of the pension market.

Lee In-seon, Member of the People Power Party

The Income Tax Act, amended in 2013, applies a separate taxation rate of 3-5% only if the private pension receipt amount is 12 million KRW or less per year. If it exceeds 12 million KRW, a tax rate of 12-15% is applied, so most pension subscribers often signed up for products based on a receipt amount of 12 million KRW or less per year.

Moreover, although the average annual expenditure of elderly households aged 65 or older increased by 50%, from 11.53 million KRW in 2013 to 17.29 million KRW in 2022, the separate taxation threshold has been fixed at 12 million KRW for 10 years since 2013.

Accordingly, this amendment reflects the increased household expenditures of elderly households compared to 2013, the steep inflation rate, and the nearly doubled minimum wage to make the separate taxation threshold more realistic.

If the amendment passes, it is expected that investments for individuals' retirement preparation will expand, thereby reducing social burdens. It is also anticipated to have the effect of actively attracting funds into the financial market through private pensions.

Lee explained the purpose of the bill, saying, "Through the realization of the separate taxation amount for private pensions, the burden on elderly households living on pension income is expected to be greatly alleviated. As the taxation threshold is raised, the proportion of expanding the scale of private pensions will increase, and the inflow of funds into the financial market will increase, which is expected to have a positive effect on the stock market."