Compare estimated payouts of DC (Defined Contribution) and DB (Defined Benefit) retirement pension plans based on the South Korean retirement pension system. Free, no sign-up required.
Enter your current age, expected retirement age, and years of service. Years of service means the total period you have worked at your current company and forms the basis of retirement pay calculation. Enter actual figures for an accurate comparison.
Enter your current pre-tax monthly salary and expected annual salary growth rate. You can reference your average raise over the past 3-5 years. Typically 3-5% for large Korean corporations and 2-3% for SMEs. Conservative estimates are recommended.
Set the expected return rate for DC. Principal-guaranteed products yield 2-3%, bond-mixed 3-5%, and equity-mixed 5-8%. DB return rate is managed by the employer and shown for reference. Set a realistic rate based on your investment style.
Compare DB and DC estimated payouts, review simulations by salary growth rate, and check yearly details. Try different conditions to understand which type is advantageous in various scenarios.
For employees with less than 5 years of service, DB retirement pay is still small. DC benefits from compounding when started early, making it advantageous from a long-term investment perspective. Especially suitable if you plan to change jobs.
If you have long tenure and steady salary growth, DB is likely more advantageous because the high final salary is multiplied by total years of service. However, consider switching to DC if future salary growth is expected to slow down.
With less than 5 years to retirement, switching to DC may not provide enough time for compounding. Maintaining DB is generally more advantageous. However, gaining DC management experience before transferring to IRP (Individual Retirement Pension) after retirement can be a strategy.
| Category | DB (Defined Benefit) | DC (Defined Contribution) |
|---|---|---|
| Payout Calculation | Final salary x years of service | Annual contributions + investment returns |
| Investment Manager | Employer | Employee |
| Investment Risk | Borne by employer | Borne by employee |
| Advantageous When | High salary growth rate | High investment returns |
| When Changing Jobs | Settled and restarted | Funds transferable |
| Additional Contributions | Not allowed | Allowed (with tax benefits) |
DB (Defined Benefit) determines retirement pay by multiplying average wages at retirement by years of service. The employer bears investment risk. DC (Defined Contribution) requires the employer to contribute at least 1/12 of annual wages yearly, which the employee invests directly. Retirement pay varies by investment performance. Simply put, DB fixes the 'payout amount' while DC fixes the 'annual contribution amount'. Based on South Korean retirement pension law.
Under the Korean Employee Retirement Benefit Security Act, switching between DC and DB is possible in both directions. However, the company's pension regulations must include conversion provisions, and labor-management agreement may be required. Existing funds transfer to the new type, and new rules apply from the conversion date. Consider salary levels and market conditions when timing the switch.
According to Korea's Financial Supervisory Service statistics, the average DC pension return is 2-4% annually. Principal-guaranteed products may yield only 1-2%, while higher equity allocation can achieve 5-8%+ but carries loss risk. Realistically, targeting medium-risk/medium-return through bond-mixed funds (3-5%) or TDFs is sensible. Always compare fee rates for long-term investments.
Generally, DB is advantageous when salary growth exceeds DC return rates. However, this isn't always true. DC compounds annually, so achieving high early returns can make DC advantageous even if salary rises significantly later. Also, DB settles based on salary at each departure, so frequent job changes diminish DB's advantage. Personal simulation is key.
DC allows early withdrawal for statutory reasons: home purchase for non-homeowners, deposit burdens, medical treatment exceeding 6 months, bankruptcy/rehabilitation, or natural disasters. DB does not allow early withdrawal and is only payable upon retirement. Early withdrawal incurs retirement income tax, and amounts that received tax deductions face additional 16.5% other income tax.
When changing jobs, DB retirement pay is settled and transferred to an IRP (Individual Retirement Pension). DC funds transfer entirely to IRP for continued management. If you join DC at your new employer, you can transfer IRP funds to the new DC account. DC is advantageous for frequent job changers because, unlike DB where benefits are settled each time, DC funds are continuously managed without interruption.
한국의 퇴직연금 제도는 크게 세 가지로 나뉩니다. DB형(확정급여형)은 퇴직 시 받을 급여가 사전에 확정되는 방식으로, 퇴직 직전 3개월 평균 임금에 근속연수를 곱해 산정합니다. 회사가 운용 책임을 지므로 근로자의 투자 리스크가 없습니다. DC형(확정기여형)은 매년 회사가 연봉의 1/12 이상을 적립하고 근로자가 직접 운용합니다. 운용 성과에 따라 수령액이 달라지며, 이직 시 적립금을 IRP로 이전할 수 있어 유리합니다. IRP(개인형 퇴직연금)는 퇴직 후 또는 재직 중에 개인이 추가로 납입할 수 있는 개인형 계좌로, 연 최대 900만원까지 세액공제 혜택을 받을 수 있습니다.
어떤 유형이 유리한지는 급여 인상률과 운용수익률의 비교에 달려 있습니다. 급여 인상률이 DC형 운용수익률보다 높은 경우 DB형이 유리하고, 반대로 투자를 잘해 높은 수익률을 기대할 수 있다면 DC형이 유리합니다. 이직 가능성이 높은 경우 DB형은 매번 퇴직금이 정산되어 불리한 반면, DC형은 적립금이 연속 운용되어 유리합니다. 일반적으로 입사 초기(5년 이하)나 이직 잦은 경우 DC형, 장기근속·고급여 전망의 경우 DB형이 유리한 경향이 있습니다. 이 계산기로 본인의 조건을 입력해 직접 비교해보세요.
퇴직연금 수령 시 일시금보다 연금 형태로 수령하면 퇴직소득세를 30~40% 감면받을 수 있습니다. 55세 이후 IRP 계좌에서 10년 이상 연금으로 수령하면 낮은 연금소득세(3.3~5.5%)만 부담하므로 절세 효과가 큽니다. DC형 가입자는 연간 1,800만원까지 추가 납입이 가능하고, IRP 포함 연 900만원까지 세액공제(최대 16.5%)를 받을 수 있습니다. 퇴직금을 IRP로 의무 이전하면 55세 이전 중도 인출 시 페널티가 있으므로 수령 시점을 신중히 계획하세요. TDF(타겟데이트펀드)를 활용하면 퇴직 시점에 맞춰 자동으로 안전 자산 비중을 높여주어 운용 부담을 줄일 수 있습니다.