Cold wind of retirement blows in financial market

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Cold wind of retirement blows in financial market

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Kim Jin-soo, a 49-year-old former employee of Kookmin Bank who applied for voluntary retirement late last year, has spent the past 12 months trying to figure out whether to brave the brewing economic storm and start his own business.

He had meant to use the 400 million won ($345,000) he had received in retirement incentives as a start-up fund for a fried chicken franchise near his house by the middle of this year, but the economic downturn shook his confidence.

“It’s difficult to rise to an executive level in a bank, and I thought voluntary retirement would be a good opportunity for me,” said Kim, who worked for Kookmin for 20 years. “But now that I’ve left, I miss the days when I worked there.”

Most commercial banks and many securities brokerages in the country have been accepting applications for voluntary retirement on a quasi-annual basis since the now-defunct Chohung Bank began the practice in 1992.

And this year is no different. SC First Bank, which saw its operations shrink with few negative side effects when workers launched a large-scale strike earlier this year, recently received retirement applications from 848 employees, or 13 percent of its workforce. Meanwhile, Nonghyup, which has a large financial affiliate, saw the number of its staff applying to resign swell from 391 in 2010 to 521 this year.

And Samsung Group’s four financial affiliates - Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Securities and Samsung Card - have already carried out voluntary retirement schemes after reportedly receiving over 100 applications each.

Local media reported that Kookmin Bank is planning to encourage a second and smaller round of voluntary retirements after implementing the largest batch in the financial sector, or 3,244, last year. Citibank Korea backed down from its original plan to persuade some of its staff to step down this month after employees protested the move.

As for BC Card, which was recently acquired by mobile service provider KT, it is embarking down this route for first time in a decade “after management and the workforce reached an agreement for the sake of heightened efficiency and optimal use of personnel,” it said.

Each year in Korea, employees find themselves lured to pack in their jobs after years of hard work by the eye-popping benefits on offer. SC First Bank offered a maximum lump sum equal to 34 months of pay as well as 56 million won in children’s tuition fees, additional business start-up funds and money for medical check-ups.

Many industry figures believe the rising ranks of retiring baby boomers has contributed to the groundswell of interest in voluntary retirements this year. But despite all the temptation, it seldom segues into a profitable post-career livelihood.

“Among fellow bank employees who retired at the same time as I did, very few people have succeeded in landing a new job or starting their own business,” said Kim, the ex-Kookmin employee.


By Lee Jung-yoon [joyce@joongang.co.kr]

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