Bank Sector Early Retirement Conditions Worsen... Average Severance Pay 500 Million Won, 1,800 Employees Leave
by Kim Eunha
Published 04 Feb.2024 10:07(KST)
Updated 04 Feb.2024 17:04(KST)
Voluntary Retirement Conditions Worsen... Number of Retirees Decreases Compared to a Year Ago
Since the end of last year through early this year, more than 1,800 employees from the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have taken voluntary retirement.
According to Yonhap News and banking sources on the 4th, just last month, a total of 1,496 employees from four banks?Kookmin, Shinhan, Woori, and Hana?packed up through voluntary retirement. Although the number of retirees slightly decreased compared to a year ago due to worsened voluntary retirement conditions, it is analyzed that each retiree received an average severance pay in the 500 million KRW range.
At Kookmin Bank, Shinhan Bank, and Hana Bank, 674, 234, and 226 employees retired respectively. Compared to January of last year (713, 388, and 279 respectively), all saw a decrease in retirees. Woori Bank, however, saw an increase of 13 retirees, totaling 362. It is reported that the actual retirement rate among eligible employees was higher this year.
At NH Nonghyup Bank, which was the first among the five major banks (KB Kookmin, Shinhan, Woori, NH Nonghyup) to conduct voluntary retirement at the end of last year, 372 employees retired, down by 121 from the previous year’s 493. Consequently, the total number of voluntary retirees in the first half of this year across the five major banks was 1,856, a decrease of 354 compared to 2,222 in the same period last year.
Conditions for Voluntary Retirement at the Five Major Banks Have Worsened, But...
The decrease in the number of voluntary retirees appears to be due to worsened retirement conditions this year. At the beginning of last year, the five major banks paid severance pay equivalent to up to 35?36 months of salary depending on the length of service, but this year, all have uniformly reduced the maximum to 31 months.
KB Kookmin Bank reduced its special retirement pay from 23?35 months’ salary last year to 18?31 months this year. Shinhan Bank also cut its severance pay from 9?36 months to 7?31 months. Hana and Woori Banks similarly reduced severance pay by up to 5 months’ salary.
NH Nonghyup Bank provided special retirement pay this year of 28 months’ salary for employees aged 56 and 20 months for general employees. Compared to last year, when 56-year-old employees received 28 months and general employees received 20?39 months, the severance pay has clearly decreased.
Although the voluntary retirement conditions have worsened, retirees’ severance pay is still expected to average around 500 million KRW this year, with some receiving as much as 1 billion KRW. According to the Financial Services Commission’s “Status of Compensation Systems Including Performance Bonuses at the Five Major Banks,” the average total severance pay per person at the five major banks in 2022 was 540 million KRW. This figure combines the statutory basic severance pay (average 180 million KRW) and voluntary retirement pay (360 million KRW).
Even with a reduction of 4?5 months’ salary in voluntary retirement pay this year, considering wage increases, the average severance pay per person is estimated to exceed 500 million KRW. Among bank employees who left the company from late 2022 to early 2023, some long-term employees received more than 1 billion KRW by combining statutory basic severance pay and special retirement pay.
At Hana Bank, the top five severance pay recipients each received over 1 billion KRW. At Kookmin, Shinhan, and Woori Banks, the top five severance pay recipients received between 700 million and 900 million KRW each.
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