In the Era of Life Extension: 'Early Pension VS Deferred Pension, Which Is More Advantageous?'

NH Investment & Securities 100-Year Life Research Institute National Pension Special 'THE100 Report No. 65' Published on the 2nd

[Asia Economy Reporter Geum Bo-ryeong] In an era of extended life expectancy, analysis shows that deferred pension is relatively more advantageous than early pension.

According to NH Investment & Securities' 100-Year Life Research Institute on the 2nd, assuming the basic old-age pension (starting at age 65) is 10 million KRW annually, the cumulative amount received by age 83 is 190.4 million KRW for deferred pension, 190 million KRW for old-age pension, and 168 million KRW for early pension.

The starting age for National Pension benefits varies depending on the birth year. This is because, reflecting the trend of increased life expectancy, regulations have been introduced to raise the pension starting age. Those born up to 1952 can receive benefits from age 60, but the starting age is delayed by one year every three years, so those born after 1969 must wait until age 65 to receive the old-age pension. The old-age pension serves as the foundation of the National Pension, providing income security in old age.

Basically, the old-age pension can be received at the pension starting age, but there is an 'early old-age pension' option to receive it earlier, and a 'deferred old-age pension system' to receive it later. The early old-age pension is operated to address the income gap after retirement. However, if benefits start earlier, payments are reduced by 6% per year or 0.5% per month depending on the age.

The deferred old-age pension system can be chosen when the pension starting age is reached but the individual continues working with stable cash flow. This is because if there is income at the pension starting age, the basic pension is reduced according to income brackets for five years.

The NH Investment & Securities 100-Year Life Research Institute assumed a basic old-age pension (starting at 65) of 10 million KRW annually to compare early pension (at 60) and deferred pension (at 70). Inflation was not considered as it is relatively low in a low-growth era.

Kim Jin-woong, Deputy Director of NH Investment & Securities 100-Year Life Research Institute, said, "Comparing early pension and old-age pension, the cumulative amount received from the old-age pension becomes greater by age 76. Considering the trend of increased life expectancy, early pension becomes increasingly disadvantageous, so it is better to avoid choosing it unless urgently needed." He added, "Comparing old-age pension and deferred pension, the cumulative amount received from deferred pension is greater by age 83. Deferred pension is structured to benefit longevity, so the longer you live, the greater the advantage."

Kim also added, "However, rather than forcing the choice of deferred pension despite low income, it is advisable to carefully consider health and financial status when making the decision."

The NH Investment & Securities 100-Year Life Research Institute published the National Pension special issue 'THE100 Report No. 65' containing this information on the same day. This issue covers topics such as 'Lifelong Dual Pension with National Pension' and 'Should I Manage My Retirement Assets Like the National Pension?'. It explains how couples can achieve lifelong dual pensions using voluntary enrollment and later payments in the National Pension, and introduces the National Pension Fund's management strategy that achieves long-term stable returns.

Park Jin, Director of NH Investment & Securities 100-Year Life Research Institute, said, "Depending on how it is managed, the National Pension can become a pocket money pension or a reliable pillar for old age."

THE100 Report No. 65 is available at NH Investment & Securities nationwide branches or on their website.