Under such a system, an employee's wages reach a peak and then begin to decline as retirement nears.
The world's fifth-largest auto group, which includes Hyundai Motor Co and Kia Motors Corp, said in a statement that the plan was the company's response to "a social need for creating jobs for the youth and stabilizing employment conditions."
The announcement comes after South Korean president Park Geun-hye last week called for "major surgery" on the economy, urging businesses to boost hiring.
