Pension Savings Pledge Loan vs Partial Withdrawal Calculator

Compare a pension-savings pledge loan and withdrawal for the same cash need

A temporary household or family expense may lead you to consider withdrawing from a Korean pension-savings fund or borrowing against it.
A KRW 10 million loan and a KRW 10 million gross withdrawal do not necessarily deliver the same spendable cash.
Ordinary non-pension withdrawals from credited contributions and investment earnings are subject to withholding, so the required gross withdrawal must be calculated from the net cash target.

This calculator holds that target constant and compares immediate partial withdrawal with an actual quoted pledge loan.
It separates initial withdrawal tax, interest and fees, tax on an approved withdrawal used for repayment, retained pension assets and collateral shortfalls.
The purpose is to understand both external cash commitments and reductions in pension assets, rather than compare a tax percentage directly with an annual borrowing rate.

Check the supported account scope first

The comparison covers an individual pension-savings fund before pension payments begin, using ordinary non-pension withdrawals.
It requires no deferred retirement-income source, provider-confirmed original prior-year non-credited and credited book principal before losses, and signed cumulative investment profit/loss.
The account name alone does not establish the absence of transferred retirement money; check the actual tax-source statement.

Income Tax Act Article 129 introduced relevant indirect investment foreign-tax-credit provisions effective July 1, 2026.
Those provisions can change actual withholding.
Do not treat this worksheet’s basic 16.5% assumption as a confirmed tax amount for an affected account; obtain the provider’s credit details and expected withholding separately.

Withdrawal order and loss allocation run in opposite directions

Article 40-3 of the Enforcement Decree of the Income Tax Act orders withdrawals from tax-excluded amounts, then deferred retirement income, then credited contributions and investment earnings.
Because this calculator excludes deferred retirement income, it uses tax-excluded money first and funds the remaining requirement from the taxable pool.
Credited contributions and earnings belong to the same pool; the model does not let you choose a particular security or tax lot to withdraw.

Principal inputs must be the provider’s original book principal before losses, with the corresponding signed cumulative investment profit/loss entered separately.
Do not substitute already loss-adjusted current tax-source balances for original principal or reset cumulative losses to zero.
Check the statement fields so original principal and cumulative investment results remain separate.

If the unwithdrawn account retained during borrowing recovers after a loss, the model recalculates ending tax sources from original book tax-excluded principal, credited principal and cumulative investment profit/loss.
Recovery of tax-excluded principal previously reduced by losses is not automatically classified entirely as a new taxable gain.
If only adjusted current balances are available and original pre-loss book principal is unverified, set source status to Unknown and withhold immediate-withdrawal and future partial-withdrawal repayment projections.
Recalculate after the provider confirms original book principal and cumulative investment profit/loss.

Distinguish verification dates from current-year contributions

Other non-credited contributions become tax-excluded from their verified date.
Remembering that you did not claim a credit is different from having the withholding provider verify the relevant account balance.
Review the pension contribution income/tax-credit certificate and the provider’s reflection of it, then enter a verification date no later than the execution date.

Do not repeat the same non-credited contribution amount across several pension accounts.
Unknown source information withholds withdrawal results; fictional examples remain distinct from confirmed facts.
An account transfer, additional contribution or changed credit claim requires a new balance check and calculation.

Gross up the withdrawal from the net cash target

Ordinary non-pension withdrawals of credited contributions and investment earnings use basic national withholding of 15%, plus local income tax of 10% of that national amount, totaling 16.5%.
The worksheet applies the rate to the taxable withdrawal after using tax-excluded sources, not to the full account value.
It does not add the historical contribution tax credit again as a second tax charge.

An insufficient account is not presented as successful funding.
Review maximum available net cash and the remaining shortfall, then lower the target or arrange another source.
If the result exhausts the account, check the product’s full-termination conditions as well.

Interest follows calendar days; extensions require approval

Interest is principal multiplied by the annual rate and actual calendar days, divided by 365.
The schedule splits at interest payment dates, contractual maturity and the intended end date.
Within each rate segment, differences between rounded cumulative interest amounts allocate payments so schedule interest sums to the displayed total.

The interest payment day is limited to 1–28 and the model period to five years.
It does not reproduce overdue interest, capitalization of unpaid interest, automatic rate changes or payment-date shifts for bank holidays.
Use the provider’s agreement and actual bill if its day-count, leap-year or final billing convention differs.

External cash repayment differs from approved withdrawal funding

Selling a fund inside the account and withdrawing cash out of the pension account are separate actions.
The model does not assume that every won of fund sale proceeds can repay debt without withholding.
Official provider FAQs include cash-only repayment and full sale/redemption after non-payment, so this partial-withdrawal scenario must not be read as a reproduction of automatic forced liquidation.

Separate collateral top-up from principal repayment needed

For example, assume principal of KRW 5 million, recognized collateral of KRW 10 million, a 140% maintenance ratio and an immediate 40% price decline.
Collateral falls to KRW 6 million against a KRW 7 million requirement.
The additional recognized collateral needed is KRW 1 million, but cash principal repayment needed to restore the ratio is about KRW 714,286; those figures describe different actions.

This stress is separate from the annual return used to project ending pension assets.
The model does not determine default, changing asset-specific haircuts, top-up deadlines or forced-sale ordering.
If a shortfall appears, confirm the funding and cure process before choosing an option solely for its modeled cost.

Interpret net cost and break-even outputs

Immediate-withdrawal net cost is initial withdrawal tax plus the assumed investment profit or loss on the gross amount withdrawn.
Loan net cost combines interest, fees and any tax on an approved withdrawal used to fund principal repayment.
The comparison uses nominal assets and external cash at a common date, excluding future pension-receipt tax and the time value of external cash.

Under a loss assumption, immediate withdrawal may avoid later modeled losses and show a negative net cost.
That is not a guaranteed gain or tax saving.
A lower-cost route is displayed only when inputs are confirmed, both routes can supply the cash, required extension/withdrawal approvals exist and collateral conditions are met; fictional examples withhold an execution judgment.

Fictional example: raising KRW 10 million net

Assume tax-excluded principal of KRW 2 million, credited principal of KRW 18 million and no investment gain or loss.
Raising KRW 10 million net immediately requires about KRW 11,580,838 gross withdrawal, including approximately KRW 1,580,838 model tax.
Simply withdrawing KRW 10 million gross from the KRW 20 million account would fall short of the cash target.

The 6% rate and 365-day period are explanatory assumptions, not a product quote or approval.
Borrowing preserves pension assets but requires external cash for KRW 10 million principal plus interest.
If pension withdrawals will instead fund repayment, recalculate the related tax and asset reduction; the external-cash figures do not apply unchanged.