The Rate Varies With Age at Receipt
Money drawn as a pension from a pension account carries pension income tax. Rather than one rate applying throughout, it varies with the age at which the pension is received.
A separate rate applies to pensions received under a lifetime contract. Deferred retirement income drawn after moving a retirement payment into a pension account is also calculated differently from ordinary pension savings receipts.
On the same amount, 5.5% applies at 65 and 3.3% at 82. The rate steps down once at 70 and again at 80.
Delaying the start of a pension on the rate alone may not be right, though. A pension is money for living costs, so when other income falls after retirement and whether there are sufficient funds for the interval both matter.
A pension account can be drawn as a pension from age 55 where the requirements are met. The rate falls the later it is drawn, but where living costs in the meantime mean drawing on other assets first, the overall funding plan changes.
What Is Withheld at Each Pension Level
We calculated the tax actually withheld by the private pension received in a year, including local income tax.
KRW 660,000
The tax withheld on a pension of KRW 12 million a year for someone under 70.
These rates apply to contributions that drew a tax credit and to the returns from investing that money. Contributions on which no tax credit was claimed have already been taxed and are not taxed again when received as a pension.
For someone receiving KRW 12 million a year, reaching 70 cuts the tax from KRW 660,000 to KRW 528,000, a fall of KRW 132,000. From 80 it falls again to KRW 396,000.
Taking the same KRW 12 million a year over ten years as a simple calculation, 5.5% gives KRW 6,600,000 of tax and 3.3% gives KRW 3,960,000. The difference is KRW 2,640,000.
Against the ordinary interest income tax of 15.4%, pension income rates are low. Had the same KRW 12 million been deposit interest, the tax would have been KRW 1,848,000.
What Changes Above KRW 15 Million a Year
Where private pension receipts exceed KRW 15 million in a year, withholding alone does not conclude the taxation. At the global income tax filing there is a choice between global taxation and separate taxation.
Public pensions such as 국민연금 (the National Pension) are not included in this measure. The KRW 15 million here is the combined private pension from 연금저축, retirement pensions, and the like.
Choosing separate taxation at 15% gives an actual burden of 16.5% including local income tax. On KRW 18 million that is KRW 2,970,000, and on KRW 20 million KRW 3,300,000.
That is a wide gap against the 3.3–5.5% applying at KRW 15 million or less.
Choosing global taxation combines the pension with other global income at progressive rates. With little other income, global taxation can produce less; with substantial employment or business income, separate taxation at 16.5% can come out lower.
Receiving KRW 18 million of private pension with no other income, for instance, can fall in a comparatively low rate band even under global taxation. Where employment or business income is already large, adding pension income can push into a higher band.
So above KRW 15 million, calculating the tax under both methods including other income before choosing is the accurate approach.
Where annual receipts sit slightly above KRW 15 million, whether the amount received in a year can be adjusted is worth checking. Lengthening the payout period or staggering the start dates across accounts reduces the bunching of receipts into a particular year.
Holding several 연금저축 and IRP accounts does not require starting them all in the same year. Splitting the start dates across accounts changes the annual private pension received.
Paying In and Drawing Out, Looked At Together
Tax on a pension account arises at two points: on contribution and on receipt. Contributions draw a tax credit, and pension receipts carry pension income tax.
Someone on a credit rate of 16.5% contributing KRW 3 million can receive KRW 495,000 back as a tax credit. When that amount is later drawn as a pension, pension income tax of 3.3–5.5% applies according to age.
Conversely, withdrawing money that drew a tax credit other than as a pension, or taking it as a lump sum, generally attracts other income tax of 16.5%.
So a pension account is not judged on the tax credit alone; how the money will later be drawn matters too. Different tax applies to receiving it in pension installments and taking it as a lump sum midway. The tax credit and limits available on contribution are set out separately in the tax credit for 연금저축 and IRP.
Contributions on which no tax credit was claimed are not taxed when received as a pension either. Amounts contributed above the credit limit, or on which no credit was claimed, fall here.
Frequently Asked Questions
Which age is used?
The age at the point the pension is actually received. At 70 the rate falls from 5% to 4%, and at 80 it becomes 3%. The rate at the start of the pension does not stay fixed.
Does 국민연금 carry the same rate?
No. Public pensions such as 국민연금 are taxed under a separate method. The 3.3–5.5% described here applies to private pensions such as 연금저축 and retirement pensions drawn in pension form.
What happens above KRW 15 million?
There is a choice between global taxation and separate taxation at 15%. Including local income tax, the separate taxation burden is 16.5%. Which produces less tax depends on the scale of other global income.
Does the KRW 15 million include 국민연금?
No. It runs on private pension receipts. Amounts from 연금저축, retirement pensions, and the like are combined for the test, and public pensions such as 국민연금 are calculated separately.
What rate applies to a lump sum?
Drawing credited contributions and investment returns other than as a pension generally attracts 16.5%, above the 3.3–5.5% applying to pension receipts.
On the rate alone, is drawing later better?
The pension income rate falls with age. Where living costs during the years without a pension have to come from other assets, though, the overall result changes. Retirement timing, other income, and living costs all belong in the calculation alongside the rate.
What if I am slightly above KRW 15 million?
Where annual receipts can be adjusted, lengthening the payout period or staggering start dates across accounts are options. Simply landing below KRW 15 million is not always better, so the global taxation result and other income belong in the comparison.
Does pension income affect health insurance?
Pension income can be included in assessing the income requirement for health insurance dependent status. The scope differs from global taxation of financial income, which combines interest and dividends only.
Are uncredited contributions taxed?
Contributions on which no tax credit was claimed are not taxed when received as a pension, since they were paid in from income already taxed.
Sources and basis
- Withholding rates on pension income — 국세청 guidance on pension income withholding; 5% under 70, 4% from 70 to under 80, 3% from 80
- Local income tax — Local Tax Act article 103-13, 10 hundredths of the income tax withheld
- The KRW 15 million private pension line — above it, a choice between global taxation and separate taxation at 15%
- Other income tax of 15% on non-pension receipts — Income Tax Act article 129
- Pension account tax credit — Income Tax Act article 59-3
Tax law is subject to amendment. The law was verified on August 9, 2026.