The pension early-withdrawal article said three times that "the interim settlement of statutory severance is a different provision, and we have not checked it." Today we opened that provision: art. 8(2) of the Guarantee of Workers' Retirement Benefits Act and art. 3 of its Enforcement Decree. And we laid it beside the two lists compared back then (collateral, art. 2; DC early withdrawal, art. 14) as a third list. six items overlap - and three reasons exist only in the settlement list.
1. It says "may". Art. 8(2): where the worker asks, the employer "may" settle and pay early - unlike paragraph 1's "shall" set up a scheme.
2. Three reasons exist only here - a wage-peak scheme, an agreed hours cut (three months or more), and the cut under the 2018 amendment (Act No. 15513). All three are about pay falling before retirement.
3. Medical costs must exceed 12.5% of annual pay - on 40m won that is over 5,000,000 won. The collateral list (art. 2) has no such floor.
It reads art. 8(2) of Korea's Guarantee of Workers' Retirement Benefits Act and art. 3 of its Enforcement Decree as written. Art. 8(2) says that where a worker asks for a reason set by Decree, such as buying a home, the employer "may" settle and pay the severance early - and its second sentence restarts the service period for any later severance from the settlement date. Decree art. 3(1) lists: a worker with no home buying one in their own name; a worker with no home paying a jeonse or rental deposit (once per employer); medical costs for the worker, spouse or a dependant needing 6 months or more of care, borne by the worker in excess of 125/1000 of annual pay; a bankruptcy order or an individual rehabilitation order within 5 years counting back from the application; a wage-peak scheme that cuts pay in return for extending or guaranteeing the retirement age; an agreed cut of 1 hour a day or 5 hours a week worked for 3 months or more; a fall in severance caused by the working-hours cut under Act No. 15513; and disasters as set by Ministry notice. The same Decree's art. 2 (pledging pension rights) and art. 14 (DC early withdrawal) are laid beside it - the wage-peak and hours-cut reasons exist only in the settlement list, while tuition, wedding and funeral costs exist only in the collateral list. The employer keeps the evidence until 5 years after you leave (art. 3(2)). Even a listed reason leaves the settlement to the employer's "may" - this is an estimate; confirm with the Ministry of Employment and Labor call centre (1350).
Three lists, and only six items are shared
The phrase "reasons set by Presidential Decree, such as buying a home" appears three times in the same Decree - art. 2 (pledging pension rights as collateral), art. 3 (interim settlement of severance) and art. 14 (early withdrawal from a defined-contribution plan). They are usually described as one list. All three differ.
| Reason | Settle (3) | Pledge (2) | DC (14) |
|---|---|---|---|
| No home: buying one | (i) | (i) | yes |
| No home: deposit (once) | (ii) | (i-2) | yes |
| six months of care, medical costs | (iii), over 12.5% | (ii), no floor | (i-2), over 12.5% |
| Bankruptcy within five years | (iv) | (iii) | (ii) |
| Rehab order within five years | (v) | (iv) | (iii) |
| Wage-peak scheme | (vi) | — | — |
| Agreed hours cut | (vi-2) | — | — |
| 2018 statutory hours cut | (vi-3) | — | — |
| Disaster (notice) | (vii) | (v)* | (i) |
| Tuition, wedding, funeral | — | (iv-2) | — |
| Repaying a pension loan | — | — | (iv) |
In the table, "settle" is interim settlement, "pledge" is collateral, and the DC column is early withdrawal. *Art. 2's disaster item also covers pay lost to an employer shutdown; art. 14's loan item is limited by a Ministry notice. Art. 14 borrows art. 2 by number ("art. 2(1)(i), (i-2) or (v)"), while art. 3 writes the sentences out again. That is how art. 3 could carry items art. 2 lacks - and those items are (vi), (vi-2) and (vi-3).
Before pay falls - the three reasons only the settlement list has
Severance is priced on the average wage of the last three months before leaving (see the severance calculator). So if pay falls first, every year already served is priced at the lower wage. The three items let you draw a line before that happens.
(vi) Wage-peak scheme - "where the employer operates a scheme that reduces wages by reference to a certain age, length of service or wage level, through a collective agreement or rules of employment, on condition of extending or guaranteeing the existing retirement age." The trigger is the company's scheme, not the worker's circumstances.
(vi-2) Agreed hours cut - "where the employer, by agreement with the worker, shortens contractual working hours by 1 hour a day or 5 hours a week or more, and the worker is to keep working on the shortened hours for three months or more." Three figures, and the word "agreement" in front - a unilateral cut is not this item.
(vi-3) Statutory hours cut - "where the worker's severance falls because of the reduction in working hours under Act No. 15513 partially amending the Labor Standards Act." That is the 2018 52-hour amendment. If hours fell but severance did not, this item does not apply.
"May", not "shall"
The verbs split inside one article. Paragraph 1: an employer "shall set up a scheme" paying 30 days' average wage or more per year of service - a duty. Paragraph 2: "where the worker asks for a reason set by Decree, the employer may settle and pay in advance" - even a listed reason leaves it to the employer's discretion.
So this checker's "a listed reason" is a beginning, not an end. If the reason is listed, the worker may ask, and the employer may agree. Which also means the employer may decline.
The second sentence of paragraph 2 adds one more rule: "the period of continuous service for calculating severance after an advance settlement is counted afresh from the settlement date." Join in 2016, settle in 2022, leave in 2026, and the severance at leaving is counted on four years. The six years paid out were priced at that day's average wage; the remaining four at the wage when you leave.
Medical costs must exceed 12.5%
Art. 3(1)(iii) joins two conditions with "and". The costs must be for the worker, spouse or a dependant needing six months or more of care, and the worker must bear them in excess of 125/1000 of their own annual pay. On 40m won the floor is 5,000,000 won; on 30m won it is 3,750,000 won; and equal is not enough.
The floor sits differently across the three lists. Collateral (art. 2(1)(ii)) has none; DC withdrawal (art. 14(1)(i-2)) has the same 125/1000. Pledging needs no floor; drawing out or settling early does.
Two five-year clocks
five years back - items (iv) and (v), the bankruptcy order and the rehabilitation order, must fall "within five years counting back from the day the settlement is applied for". Collateral counts from "the day the pledge is given" and withdrawal from "the day withdrawal is applied for" - only the start date differs.
five years forward - art. 3(2) tells the employer to "keep the supporting documents until five years after the worker leaves" where severance was settled early. The worker's reason looks back; the employer's duty looks forward.
Questions that remain
I urgently need living money - can I settle?
Living costs and debts are not on the art. 3 list. Without a listed reason the employer has no basis to settle - this is the provision that, since 2012, limited interim settlement to listed reasons only. If you have a bankruptcy or rehabilitation order, though, that is (iv) or (v).
My employer refused.
Because art. 8(2) says "may", a refusal is not itself a breach. Check whether your collective agreement or rules of employment have their own settlement clause - that is outside this article.
I am in a DC pension plan.
Art. 3 governs the severance-pay scheme. For DC plans the route is early withdrawal under art. 14, and the wage-peak and hours-cut reasons are not there. DB plans have no early-withdrawal provision at all.
What about tax?
Money settled early is retirement income, and the shorter the service period, the higher the tax. Try changing the service years in the retirement income tax calculator. This article does not compute tax.
Why is the deposit reason once only?
Item (ii) says "limited to once while the worker works for one business". Change employer and the count restarts. Item (i), buying a home, carries no such limit.
Sources
Korean Law Information Center, Guarantee of Workers' Retirement Benefits Act - statute text (in force 1 July 2026) - art. 8(1) (30 days' or more; "shall set up") and art. 8(2) ("may settle and pay in advance"; second sentence, "counted afresh from the settlement date").
Korean Law Information Center, Enforcement Decree - statute text (in force 24 March 2026) - art. 3(1) items (i) to (vii) including (vi-2) and (vi-3), art. 3(2) (five years of record-keeping), and the two lists laid beside it: art. 2(1) (collateral: (i), (i-2), (ii), (iii), (iv), (iv-2), (v)) and art. 14(1)-(2) (withdrawal: (i), (i-2), (ii), (iii), (iv)).
Checker verification. 9,216 combinations (12 reasons × home ownership × deposit count × months of care × three medical costs × two pay levels × two year counts × hours cut and its duration) were checked against the statutory reading in both languages - the verdict and its provision, the yes/no across the three lists, and the medical-cost floor.
Left for another day
The disaster notice. Art. 3(1)(vii) hands disaster cases to a Ministry of Employment and Labor notice, not opened today.
Collective agreements and rules of employment. How a given workplace runs interim settlement beyond the Decree is its own rulebook.
The edge of "within five years". The Decree does not say how to count it; the checker treats exactly five as within.
Based on the 2026 provisions. The reasons, figures and periods are the source's; the three-list comparison and the medical floor arithmetic (40m won → 5,000,000 won) are ours. The checker is an estimate, and settlement remains the employer's "may" - confirm with the Ministry of Employment and Labor call centre (1350).
