Young bankers choose early retirement amid soaring bank profits

Customers consult clerks at a bank in downtown Seoul, March 27. Newsis

By Lee Yeon-woo

The age of bankers opting for voluntary retirement is consistently decreasing, with even those in their late 30s now taking this route. Market watchers attribute this trend to a surge in banks' profits, leading to favorable early retirement terms, and a growing inclination among individuals to swiftly plan for the next chapter of their lives.

According to financial sources, Thursday, Shinhan Bank plans to begin early retirement applications as soon as this weekend and will continue until the early part of next week. Eligibility is given to those born before 1983 who have worked for over 15 years.

The youngest eligible age to apply for retirement this time, 39, is the lowest since Shinhan Bank introduced its voluntary retirement program. Compared to the early retirement program in January, which used 1978 as the cut-off birth year, the age criterion has been reduced by five years in just over seven months.

Hana Bank also concluded its voluntary retirement process at the end of July, resulting in 60 employees departing the bank. The bank accepted applications from those aged over 40 who have worked there for more than 15 years.

Major banks offering voluntary retirement programs to younger employees are driven partly by the shift towards digitalization, which requires the downsizing of offline branches. An increasing tendency among employees to opt for retirement also played a part.

“Young employees preparing for the second phase of life have continuously urged, through labor unions, for an expansion of the age limit. We have taken their feedback into account,” said a Shinhan Bank official.

Favorable retirement terms, driven by the record-high profits of commercial banks, are also believed to influence their decision to depart.

Employees retiring from Shinhan Bank will receive a special retirement package ranging from 9 to 36 months of their average monthly wage, depending on their years of service and rank.

Last month's retirees from Hana Bank also received severance pay, with a minimum equivalent to 24 months of their salary, which varied based on their tenure. Those born between 1968 and 1971 were granted additional funds for medical fees, school expenses for their children and more.

Data from Financial Service Commission indicates that the average retirement grant for five commercial banks was 540 million won ($402,474) per person last year, marking a 30 million won increase compared to 2021.

Sources mention that it's not rare for someone to receive a grant exceeding one billion won, especially if the individual joined the bank straight out of high school and maintained a long tenure with a high rank.

Between the end of last year and the start of this year, over two months, a total of 2,222 employees exited the bank.