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The Five-Year Gap Between a 60-Year-Old Retirement Age and a 65-Year-Old Pension
In Korea, the legal retirement age is 60, but the National Pension doesn’t start paying out until as late as 65. Two numbers that sound like the same thing — “retirement age” — leave a gap of up to five years with no guaranteed income in between. That gap is the most direct reason the government is now pushing legislation this year to gradually raise the legal retirement age to 65.
Under the current Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion, employers are required to set retirement at 60 or later. The National Pension’s normal payout age, meanwhile, keeps shifting later depending on birth year, reaching 65 for anyone born in 1969 or after. Even a worker who stays until retirement age still has to find another job or draw down savings before the pension actually kicks in.
An analysis by the Korea Development Institute found that generations facing a later pension start age responded by increasing their earned income to offset the shortfall. Households carrying heavy medical costs, however, weren’t able to raise their earned income enough to compensate. That’s why raising the retirement age isn’t just a question of whether people get to keep working longer — it’s also a question about the income safety net for older Koreans.
The Government’s Target Is Legislation This Year
Labor Minister Kim Young-hoon told the president on August 4 that the administration is aiming to pass retirement-age legislation in the second half of 2026. The plan isn’t to jump straight from 60 to 65 — it’s a phased increase. The government describes it as a “generationally balanced” system meant to account for both youth employment and the burden on companies at the same time.
It’s worth separating the legislative target from an enacted law. The bill to raise the retirement age to 65 has not passed the National Assembly’s plenary session, and it isn’t in effect. The start year, the pace of the phase-in, grace periods by company size, and how wages and job duties get adjusted can all still change through National Assembly review and negotiations among labor, management, and government. This isn’t the stage where you can say a specific birth-year cohort will definitely work until a specific age.
The Democratic Party’s special committee on retirement-age extension has discussed a plan to raise the retirement age to 61 in 2029, then add one year every two years until it reaches 65 in 2037. A separate idea floated alongside it would pair the extension with post-retirement rehiring. But that timeline is still closer to a working draft than to language that will end up in the final law.
Raising the Retirement Age and “Continued Employment” Are Two Different Systems
The real fight isn’t over whether older workers should be allowed to keep working — it’s over what kind of employment contract they’ll be working under. Raising the legal retirement age keeps the existing employment relationship intact and simply pushes back the date it ends. “Continued employment,” by contrast, has workers retire at 60 and then return through rehiring or a renewed contract.
The two approaches produce very different outcomes on pay and job duties. Raising the retirement age tends to preserve continuity with a worker’s existing terms. Rehiring gives the company much more room to reset the job, hours, and pay from scratch. Japan requires companies to offer employment through age 65, but in practice, rehiring often comes with a pay cut. That’s a big part of why Korean labor unions favor a legal retirement-age extension while employers keep pushing rehiring as the alternative.
Wage Structures and Youth Hiring Are the Biggest Sticking Points
Companies worry that simply extending the retirement age while leaving Korea’s seniority-based wage system untouched — where pay climbs automatically with age and tenure — will drive up labor costs and clog up the management ranks. The government says it plans to pair the extension with changes to job duties, working hours, and wage structures to soften that impact. But changing employment terms in workers’ favor still requires their consent and a fair set of standards, which makes the details hard to design.
Youth employment is never far from this debate either. One argument holds that if large companies and public institutions keep existing employees on longer, there’s less room for new hires. The counterargument is that older-worker employment and youth hiring don’t necessarily compete for a fixed number of jobs — corporate investment and workforce demand matter more. The actual effect is likely to vary a lot by industry and company size.
The government says it plans to improve how public institutions manage headcount and total labor costs, and to strengthen enforcement of the youth-hiring quota system to protect new hiring. In other words, the approach isn’t to roll out the retirement-age extension on its own — it’s meant to be bundled together with youth hiring targets, redesigned job roles for older workers, and a shift in wage structure.
Even After the Bill Passes, Real Change Will Take Time
What the National Assembly will actually be negotiating in the second half of the year isn’t the final number, 65 — it’s the path to get there. Move fast, and more of the generation currently stuck in the pension gap gets protected, but companies face a bigger adjustment burden. Slow the pace down, and companies get more time to prepare, but some of the generation already caught between the retirement age and the pension could miss out on the benefit altogether.
Even once the law passes, it still has to go through labor-management negotiations, revised work rules, and job redesign at each individual workplace. So a bill getting passed this year doesn’t mean every worker’s retirement age becomes 65 overnight. The numbers worth watching from here are the final effective date and who it applies to, the scope of any rehiring obligation, new hiring numbers for young workers, and how much of workers’ actual pay survives the transition.
Source: Kim Woo-jin, Seoul Shinmun, August 5, 2026; Moon Hye-won, Asia Economy, August 4, 2026; Korea Development Institute, “Response Measures for the Widening Pension Gap,” 2023.
