The country’s second largest refiner GS Caltex Co. announced Tuesday that it will raise the retirement age by two years and apply peak salary system from next year.

Under the agreement GS Caltex reached with its labor union last month, the retirement age will be raised from 58 to 60 years of age from Jan. 1, 2012.

With the peak salary system taking effect on the same date, the base pay for workers aged 59 and 60 years will be fixed at 80 percent of their pay at 58 years of age.

“So, if a worker received 1 million won a month when 58 years old, the pay would be fixed at 800,000 won for the two years,” a GS Caltex official said.

“The measure will be introduced as a means to boost morale, and the new arrangement will only be applied to those working during the extended period.”

Under peak salary system, workers are guaranteed employment until retirement age, but their salaries become fixed once workers reach a certain age.

Introduced to South Korea in the early 2000s, peak salary system is used to address the problem of dwindling skilled workforce, and as a means to allow older workers to maintain employment in an aging society.

While GS Caltex will apply the system only to those continuing to work for the two additional years, other companies with the peak salary system in place begin reducing the pay up to four years ahead of the retirement age.

By Choi He-suk (cheesuk@heraldcorp.com)