[비즈한국] The National Samsung Electronics Union (NSEU) demanded on the 15th that Samsung Electronics introduce a 'system providing an option to allocate management performance bonuses into retirement pension or Individual Retirement Pension (IRP) accounts.' The proposal aims to allow employees to choose whether to receive their Overall Profit Incentive (OPI) and Target Achievement Incentive (TAI) in cash or contribute them to their retirement pension accounts. This demand comes from the NSEU, which is distinct from other recently highlighted groups such as the so-called 'DS Union (Enterprise Union, Samsung Electronics Branch)' or the 'DX Union (Samsung Electronics Labor Union Donghaeng).'
When performance bonuses are received in cash, they are added to the employee's annual earned income, making them subject to income tax. However, if the company contributes the amount to a Defined Contribution (DC) retirement pension account under certain conditions, it is not taxed as earned income at that time. Taxation can be deferred until retirement, at which point it is taxed as retirement income. For high-earners or those receiving six-figure bonuses, the immediate difference in tax burden can be substantial.
30,000 SK Hynix Employees Opt In… 1 Trillion Won in Bonuses Moved to Retirement Pensions
It is not that Samsung Electronics lacks a DC-type retirement pension system. The company operates both Defined Benefit (DB) plans, where retirement benefits are pre-determined and the company bears the management risk, and DC plans, where contributions are fixed and benefits depend on investment performance. Last year, Samsung Electronics recognized approximately 130.4 billion won in DC-type retirement benefit expenses. However, it does not operate a 'Management Performance Bonus DC' system like SK Hynix, which allows a portion of performance bonuses to be deposited into DC accounts as separate employer contributions.
Starting this year, SK Hynix has allowed employees to deposit a portion of their Profit Sharing (PS) into a management performance bonus DC account. According to the financial investment industry, out of approximately 35,000 SK Hynix employees, about 30,000 chose to contribute their performance bonuses to DC accounts this year. Depending on their years of service, they contributed 10–50% of their PS, with approximately 1 trillion won reportedly moved into retirement pension accounts. The total PS funding pool was about 4.7 trillion won.
The performance bonuses themselves were significant. SK Hynix set the PS payment rate for this year based on last year's performance at 2,964% of the base salary. For an employee with an annual salary of 100 million won, this amounts to approximately 148.2 million won. Beyond the option of depositing a portion into a DC retirement pension, SK Hynix also operates a system allowing employees to receive a portion of their bonus in company stock.
The NSEU claimed that LG Electronics also operates a similar management performance bonus retirement pension system. However, specific details regarding LG Electronics' contribution methods, rates, and the number of participating employees have not been verified through public records.
A 100 Million Won Bonus Could Result in ~41 Million Won More in Taxes if Received in Cash
The primary reason for the growing interest in the Management Performance Bonus DC system is taxes. The current income tax system uses progressive rates: 35% for the portion of taxable income between 88 million and 150 million won; 38% for 150 million to 300 million won; 40% for 300 million to 500 million won; 42% for 500 million to 1 million won; and 45% for amounts exceeding 1 billion won. Local income tax adds another 10% of the calculated income tax.
For example, assuming a hypothetical employee with an annual salary of 200 million won (applying only standard earned income deductions and personal basic deductions) receives an additional 100 million won bonus in cash, the additional income tax and local income tax would amount to approximately 41 million won. While this isn't a flat 41% tax applied to the 100 million won, it represents the increase in annual tax liability caused by adding the bonus to existing earned income. The actual tax amount varies depending on dependents and various income/tax deductions.
Conversely, if this 100 million won is contributed to a Management Performance Bonus DC account according to tax law requirements, it is not included in that year’s earned income, allowing the employee to avoid the immediate tax burden of approximately 41 million won.
This does not mean the tax disappears entirely; the performance bonus in the DC account is taxed as retirement income upon withdrawal.
Retirement income is calculated separately rather than being added to other earned income taxed at the comprehensive income tax rate (6–45%). If the retirement pension is received in the form of an annuity rather than a lump sum, the deferred retirement income tax can be partially reduced.
As of 2026, if the actual annuity withdrawal period is 10 years or less, only 70% of the retirement income tax that would have been paid on a lump sum is withheld; if it exceeds 10 but is 20 years or less, 60% is withheld; and if it exceeds 20 years, only 50% is withheld. A regulation applying a 50% rate for annuity receipts exceeding 20 years went into effect this year.
In short, unlike being subject to a high marginal tax rate by adding a large bonus to high earned income, deferring tax by moving the bonus into retirement benefits and receiving it as a long-term annuity can reduce the final tax burden. However, one must consider that there are restrictions on mid-term withdrawals from retirement pension accounts.
Average Samsung Electronics Salary is 153.63 Million Won… Tax Saving Incentives Grow with Rising Bonuses
The incentive for such a system is also growing for Samsung Electronics employees. According to the 2025 business report, Samsung Electronics has 128,881 domestic employees, with an average annual salary of approximately 153.63 million won. The number of employees rose to 129,200 by the end of June 2026.
The 2025 OPI paid in January of this year was 47% of the annual salary for the DS Division and 50% for the MX Business of the DX Division. OPI is a flagship Samsung performance bonus paid out when divisional performance exceeds goals, based on excess profits, up to a maximum of 50% of an individual's salary.
In this year's wage negotiations, a separate 'Special Management Performance Bonus' was also established for the DS Division. It is structured to use 10.5% of business performance as a source, and the after-tax amount is paid in company stock based on conditions set by the company. At the time, estimates suggested that an employee in the Memory Business Unit with a 100 million won salary could receive up to 600 million won in total bonuses when combined with the existing OPI.
Employees Cannot Arbitrarily Change Contributions Every Year
However, there are constraints to making the 'option' requested by the NSEU a reality.
The current Enforcement Decree of the Income Tax Act excludes contributions for retirement benefits from earned income only if the method is one where "the employee cannot choose the contribution amount, etc." The enforcement rules specify further that the system must apply to all employees eligible for retirement benefits, that the employee cannot arbitrarily change the contribution amount at each contribution point, and that the contribution method must be specified in the retirement pension agreement.
It is possible for employees to choose whether or not to join the system. When the system is first established or the contribution method is changed, they may choose not to contribute in the future. However, a structure where employees can freely change the contribution ratio every year—such as "full cash this year, 50% DC next year"—is difficult to reconcile with the requirements for a Management Performance Bonus DC under tax law.
It is understood that SK Hynix also considered these requirements and pre-set the contribution rate at 10–50% based on factors like years of service.
It is also necessary to distinguish between an IRP and a Management Performance Bonus DC. If an employee receives a bonus in cash, pays the earned income tax, and then contributes it to a personal IRP, the tax on the bonus has already been incurred.
The general annual contribution limit for an individual to pension savings and IRPs is 18 million won, and tax credits are applied up to a maximum of 9 million won annually (including pension savings). Therefore, there is a significant tax difference between a Management Performance Bonus DC, where the company directly contributes the bonus as an employer contribution, and an individual contributing after-tax money into an IRP.
The NSEU stated, "We are prepared to cooperate actively on the prompt system construction and working-level consultations," demanding a responsible decision from the company. It added, "We have no intention of getting involved in slander against other unions or wasteful conflict," and "We will focus our capabilities on preparing for the 2027 negotiations."