Retirement calculator
Severance Pay Calculator
Calculate severance pay from your hire date, leave date and last 3 months of wages, and compare retirement income tax and the tax savings from receiving it as an IRP pension.
Enter your values and press Calculate severance pay
Estimated severance pay (pre-tax)
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Daily average wage
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Retirement income tax (including local tax)
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Lump-sum take-home amount
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Tax comparison: lump sum vs pension payout
How to use
See your severance pay and taxes at a glance
Severance pay is calculated from the average wage, and retirement income tax gets lighter the longer you have worked. If you move it to an IRP and take it as a pension, you can cut the tax further.
Enter your employment period
Enter your hire date and leave date (the day after your last day of work), and it calculates days employed and years of service.
Enter pre-departure wages
Enter your last 3 months of wages and a year's worth of bonuses and annual leave pay. Only 3/12 of bonuses and annual leave pay are counted.
Compare payout methods
Check the tax difference between taking a lump sum and receiving the money in installments as a pension from an IRP.
Formulas
Daily average wage = (total wages for 3 months + annual bonuses × 3/12 + annual leave pay × 3/12) ÷ total days in the 3 months Severance pay = daily average wage × 30 days × (days employed ÷ 365) Retirement income tax = [(retirement benefit − years-of-service deduction) ÷ years of service × 12 − converted-salary deduction] × basic tax rate ÷ 12 × years of serviceSeverance pay is available to employees who have a continuous service period of at least 1 year and work an average of 15 hours or more a week over 4 weeks (Articles 4 and 8 of the Act on the Guarantee of Employees' Retirement Benefits). If the daily average wage is lower than the daily ordinary wage, the ordinary wage is treated as the average wage (Article 2, Paragraph 2 of the Labor Standards Act). Years of service are counted with any fraction under one year rounded up to a year. Local income tax is 10% of retirement income tax.
Tax you save by taking a pension
If you move your severance pay to a pension account such as an IRP, you do not pay retirement income tax right away (tax deferral), and pay it in installments as you receive the pension. Through pension year 10 you pay 70% of the original tax, in years 11 to 20 you pay 60%, and from 2026, from year 21 onward you pay only 50%. This calculator assumes the principal is received in equal installments over the payout period and does not include investment returns.
FAQ
Can I get severance pay if I leave before completing a year?
Statutory severance pay requires a continuous service period of at least 1 year. If your company's rules or employment contract offer better terms, those apply.
Is the leave date my last day of work?
Under the Ministry of Employment and Labor's calculation method, the leave date is the day after your last day of work. For example, if you worked through Sept 30, your leave date is Oct 1.
Why are bonuses and annual leave pay counted at only 3/12?
The average wage is calculated from wages in the 3 months before leaving, so for bonuses and annual leave pay received once a year, only 3 months' worth (3/12) is added.
Does receiving severance pay through an IRP really reduce taxes?
When you transfer it to an IRP, you do not pay retirement income tax at that point, and when you receive it as a pension after age 55, you pay only 70% of the original tax (pension year 10 or less), 60% (years 11 to 20) or 50% (year 21 onward), depending on the pension year. If you withdraw it as a lump sum midway, there is no tax reduction.
Can the result differ from what my company pays?
The actual amount can differ depending on company rules, excluded periods (such as parental leave), the type of retirement pension (DB or DC) and how wage items are interpreted. For the exact amount, check with your company's HR team or the Ministry of Employment and Labor helpline (1350).
Results are estimates based on your inputs and simplified assumptions, and are for reference only, not a basis for investment decisions.
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