The leaders of the ruling and opposition parties have reached an agreement on the national pension reform plan. The reform plan includes increasing the contribution rate (the amount paid) to 13% and the income replacement rate (the amount received) to 43%.
According to the agreement, the national pension contribution rate will rise from the current 9% to 13% over 8 years, with an annual increase of 0.5% starting next year. The income replacement rate will be raised to 43% starting next year, up from 41.5% this year.
South Korea’s national pension is an important social security system designed to guarantee income in old age. All citizens aged 18 to 60 are required to participate (with exceptions for those without income).
All citizens are obligated to join, and they must contribute 9% of their income. After contributing for at least 10 years, they can start receiving their pension at age 65 (although this may vary slightly depending on the year of birth, but this will not be elaborated further). Due to increased life expectancy, the age at which people start receiving their pension is gradually being raised.
Concerns about the depletion of the pension fund have arisen due to rapid aging and low birth rates. Especially among the younger generation, there is a growing sense of anxiety, which has become a source of generational conflict.
