Retirement Age
Overview
Retirement age (정년, retirement age) refers to a system in which an employment contract with an employer automatically terminates when a worker reaches a certain age. It is determined by laws, collective agreements, employment rules, etc., and is closely related to workers' life cycles, corporate workforce management, and social security systems. As societies enter an aging phase, the retirement age system encompasses complex issues such as labor market flexibility, the age at which pension benefits begin, and intergenerational job conflicts.
Main Content
Legal Basis and Types of Retirement Age
In South Korea, Article 19 of the "Act on Prohibition of Age Discrimination in Employment and Promotion of Employment of the Elderly" (Elderly Employment Act) stipulates that employers must set the retirement age for workers at 60 or older. This was introduced through a 2013 amendment to the law and has been fully implemented since 2016. Retirement age is broadly categorized into statutory retirement age (mandated by law), collective agreement retirement age (agreed upon by labor and management), and employment rule retirement age (unilaterally determined by the employer). However, reaching the retirement age does not automatically terminate the employment relationship; the employer must clearly express their intention for retirement for it to take effect.
Background of Discussions on Extending Retirement Age
South Korea is one of the fastest-aging countries among OECD members, having entered a super-aged society in 2025 with over 20% of the population aged 65 and older. Consequently, discussions on extending the retirement age from 60 to 65 have been continuously raised. Key justifications include the income gap problem caused by the mismatch with the age at which national pension benefits begin (currently 63, rising to 65 by 2033), increasing desire for economic activity among the elderly, and a shortage of the working-age population due to demographic decline. On the other hand, companies express concerns about increased labor costs, reduced new hiring, and delayed generational turnover within organizations.
Linkage Between Retirement Age and Pensions
The gap between the retirement age and the age at which public pension benefits begin creates an "income gap" problem. For example, if a person retires at 60 but can only receive the national pension from age 63, there is a three-year period of income loss. To address this, discussions include extending the retirement age, continuous employment systems (re-employment, wage peak system), and deferred pensions. The wage peak system guarantees the retirement age while adjusting wages after a certain age, and it has spread to public institutions and private companies since 2015. However, there are criticisms that the introduction of the wage peak system may not lead to actual employment stability or may disadvantage low-wage workers.
Discussions on Abolishing Retirement Age
Some countries and companies are moving toward abolishing the retirement age altogether. The United States, the United Kingdom, and Canada generally prohibit or restrict mandatory retirement ages under age discrimination laws. Japan introduced an obligation to make efforts to employ workers up to age 70 through a 2021 amendment to the "Act on Stabilization of Employment of Elderly Persons." In South Korea, arguments have been made to create an environment where people can work regardless of age based on ability and willingness, but the dual structure of the labor market (large enterprises vs. SMEs, regular vs. non-regular workers) and seniority-based wage systems pose obstacles.
Precedents and Issues Related to Retirement Age
The Supreme Court has issued several rulings on whether dismissal based on retirement age is justified. Notably, a 2018 Supreme Court en banc decision (2015Du46336) held that when a worker re-employed after retirement reaches the retirement age again, the retirement takes effect. Additionally, if the retirement age is extended through changes to collective agreements or employment rules, issues of disadvantageous changes for existing workers may arise. Recently, a key issue is whether a company that sets the retirement age at 60 and fails to provide re-employment opportunities to workers wishing to continue working after 60 constitutes age discrimination.
Recent Trends
As of 2024, the South Korean government is focusing on revitalizing continuous employment systems rather than extending the retirement age, through its "Basic Plan for Promoting Employment of the Elderly." Since July 2024, a "Continuous Employment Support Subsidy" system has been implemented, providing partial support for labor costs to companies that continue to employ workers after age 60. Additionally, from 2025, mandatory re-employment after retirement age will be gradually introduced for public institutions. In the National Assembly, several bills to extend the retirement age to 65 (amendments to the Elderly Employment Act) have been proposed, but substantive discussions have been delayed due to opposition from the business community and disagreements between labor and management. Meanwhile, Japan is pushing to mandate employment up to age 70 from 2025, serving as an important reference case for South Korea's retirement age discussions. Globally, the trend of "age-less employment" is spreading, with an increasing number of companies eliminating mandatory retirement ages and transitioning to evaluation systems based on ability and performance.
Related Topics
- [[National Pension]]
- [[Wage Peak System]]
- [[Aging Society]]
- [[Continuous Employment System]]