Once the severance pay settlement settings are complete, you can start the severance pay settlement.
Severance Pay (Retirement Benefits) Settlement Settings is where you can configure and verify settings.
flex provides DB-type and severance pay settlement features.
For DC-type, please settle through the fund management institution.
Starting Severance Pay Settlement
Once all settings are complete, go to [Payroll Settlement] -> [Settlement] -> [Severance Pay Settlement] -> [Start Severance Pay Settlement] to proceed.
Verifying and Modifying Recipients
Verify the loaded settlement recipients.
If you have pre-configured the retirement income calculation settings, the information will be loaded; if not, please configure the retirement income calculation settings first before proceeding.
Reason: Please select the applicable option among mandatory retirement, layoff, voluntary resignation, executive retirement, and other.
Severance pay type: This reflects the type set in the severance pay basic information management. Please modify if needed.
Only DB-type and severance pay are provided.
DC-type severance pay is not provided. (Handled by the fund management institution)
Settlement start date: The start date that serves as the basis for severance pay calculation (usually the hire date, but enter a different date if it differs from the hire date)
Retirement pension provider, account number: Enter the member's account information where the severance pay will be deposited.
The retirement pension provider (bank) selected during severance pay settlement is limited to institutions that manage retirement pensions. You can check the list of pension providers (banks) here!
Mandatory transfer of severance pay to Individual Retirement Pension (IRP)
Even for severance pay (not retirement pension) payments, the law was amended to require payment to an IRP account (effective for employees who resigned after April 14, 2022)
However, payment to an IRP account is not required in the following exceptional cases:
- Retirement after age 55
- Severance pay amount of 3 million won or less
- Automatic retirement due to death and foreign workers who have departed the country
- Cases where other laws allow deduction of retirement income
Individual Severance Pay Details
Select the member's name.
Review and verify the settlement amount for the settlement recipient through the severance pay settlement screen on the right.
Individual Severance Pay Details 2 - Item-by-Item Details
Service period calculation: Automatically set based on the settlement start date and settlement end date. You can enter reasons and periods for excluded periods from the service period.
Periods excluded from service period calculation
Leave of absence due to mandatory military service under the Military Service Act
Period for which severance pay was settled in advance (interim settlement)
Previous service period where employment was not transferred
Previous service period in case of re-employment after mandatory retirement
Service period calculation - Additional days: You can add [Additional Days] to extend the retirement income calculation period and provide additional severance pay.
Average daily wage
{Total wages for 3 months + (Annual bonus X 3 / 12) + (Unused annual leave allowance X 3 / 12)} / Reflection period
Monthly fixed base pay and hourly base pay with weekly holiday allowance are combined as [Base Pay], and all allowances except bonuses and unused annual leave allowance are combined as [Other Allowances].
Through [Load Payroll Data], you can check the detailed wage breakdown for the 3 months before retirement.
If there are items you want to exclude from the average wage calculation, please use Load Payroll Data to exclude them from the average wage calculation.Annual bonus: Enter the total sum of bonuses for the 12 months from the retirement date.
Unused annual leave allowance: Enter the unused annual leave allowance for annual leave generated in the year before the year before retirement.
It is reflected in the average wage based solely on the average wage inclusion attribute, regardless of whether it was paid in the retirement month.
Daily ordinary wage: Automatically reflects the amount from the member's profile - wage contract information.
Reflects pay items recognized as ordinary wage (fixed, uniform, regular).
You can directly modify it if needed.
Retirement income: Enter if there is additional income to be paid as retirement income beyond pay items. If there is an additional payment, please enter it in [Other Payments]!
Honorary retirement pay, retirement consolation pay, delay interest, dismissal notice allowance
Deferred retirement income tax information: You can enter and modify information about the resigned employee's IRP account.
Retirement income: Check the calculated severance pay. If there are items that need deduction, you can add them in Other Deductions.
Other deductions, debt seizure, and tuition loan deduction amounts can be added.
Completing Severance Pay Settlement
If you have modified any amounts, please click Recalculate. Modified amounts are not reflected in real-time.
Once the amount review is complete, click Review Complete.
After double-checking that there are no amounts to modify, if the settlement is complete, click [Complete Settlement] at the top right to finalize the settlement.
After clicking Review Complete, you can pre-download the Retirement Income Withholding Tax Receipt and Severance Pay Settlement Statement from the three dots menu on the right.
Additionally, you can also modify the [Payment Date] at the settlement finalization stage!
Downloading Severance Pay Supporting Documents
Once the settlement is complete, you can check the details through View Details.
If you need to modify the settlement, click [Edit] at the top right to re-process the settlement.
You can download severance pay-related documents including the Retirement Income Ledger, Retirement Income Transfer List, Retirement Income Withholding Tax Receipt, and Severance Pay Settlement Statement.
FAQ
Are the retirement tax amounts calculated in flex accurate?
Are the retirement tax amounts calculated in flex accurate?
We recommend verifying through the 2026 Retirement Income Tax Calculation Program provided by the National Tax Service - Hometax! After downloading the [Retirement Income Withholding Tax Receipt], enter the amounts shown on the withholding receipt to verify the calculated tax amounts. Please download and check the 2026 Retirement Income Tax Calculation Program file below. (The file consists of first half and second half.)
Can I process an interim severance pay settlement before retirement?
Can I process an interim severance pay settlement before retirement?
Yes, you can process an interim severance pay settlement in flex!
When processing Payroll Settlement - Retirement Income - Severance Pay Settlement, if you add a currently employed member, the classification will automatically display [Interim].
Members who have undergone an interim severance pay settlement can be identified by the [Interim Settlement] tag in the special notes during subsequent severance pay settlement.
At the severance pay calculation stage, the interim settlement history is activated, allowing you to accurately pay severance pay!
