Background
Korean workers traditionally received lump-sum severance pay each time they changed jobs—money that often got spent rather than saved for retirement. The Employee Retirement Benefit Security Act of 2005 introduced corporate DB and DC plans plus an individual rollover account (then called IRA). A 2012 amendment renamed it IRP and opened it to the self-employed; since 2017 anyone with earned income can join, and since 2022 severance for workers leaving before 55 must, in principle, be paid into an IRP.
Tax benefits and investment rules
Voluntary contributions, combined with a pension savings account, earn a 13.2–16.5% credit on up to ₩9 million a year—up to ₩1.485 million back at year-end tax settlement. Severance taken from an IRP as a pension is taxed 30% less (40% less after year ten). Risky assets such as equity funds and ETFs are capped at 70% of the balance; the rest must sit in deposits or bond-type products. Fees vary by provider, so many savers choose no-fee online accounts.
Withdrawals and caveats
Unlike a pension savings account, an IRP generally doesn't allow partial withdrawals. You can only take money out early for statutory reasons, such as buying a first home, medical care lasting six months or more, bankruptcy, or natural disasters. Otherwise you must close the whole account and pay a 16.5% tax. Many people keep liquid money in an ISA and reserve the IRP for funds they won't touch until retirement.
FAQ
- Can freelancers open an IRP?
- Yes. Since 2017, anyone with earned or business income can join.
- Can I withdraw part of my IRP?
- Not without a statutory reason—otherwise you must close the account entirely.
Sources reviewed: 2026-10-26
References
- 근로자퇴직급여 보장법 제24조(개인형퇴직연금제도의 설정 및 운영).
- 고용노동부·금융감독원. (2024). 퇴직연금 통계.
- 소득세법 제59조의3.