[Asia Economy Reporter Chunhee Lee] This year, the National Pension benefits will increase by 0.5% compared to the previous year. This figure reflects last year's consumer price index change.
The Ministry of Health and Welfare announced on the 22nd that it will revise and implement a partial amendment to the "2021 National Pension Revaluation Rate and Pension Amount Adjustment" notice to maintain the real value of the National Pension and ensure an appropriate benefit level.
Under this amendment, existing pension recipients currently receiving the National Pension will see their pension payments increase by 0.5% starting this month, reflecting the 0.5% nationwide consumer price index change reported by the Statistics Korea last year. The dependent family pension amounts will also reflect the same inflation rate, with spouses receiving 263,060 KRW annually (an increase of 1,300 KRW from the previous year), and children and parents receiving 175,330 KRW annually (an increase of 870 KRW from the previous year).
New pension recipients receiving the National Pension for the first time this year will have their pension amount determined by calculating the average monthly income of all subscribers (A value) and the individual's past income converted to present value as the standard monthly income (B value), then applying these to the basic pension formula.
The A value, calculated annually at the end of the year, was 2,539,734 KRW last year. This is a 4.1% increase compared to 2,438,679 KRW in 2019.
The B value is calculated by converting the individual's income during their subscription period to present value using the revaluation rates announced in this notice for each year, summing these, and dividing by the total subscription period. The annual revaluation rate is determined by dividing the A value of 2020 by the A value calculated at the end of each year (revaluation year A value).
For example, the revaluation rate for 2010 is 1.392, meaning the A value in 2020 increased by 1.392 times compared to 2010. Accordingly, if an individual's income was 2,000,000 KRW in 2010, it will be revalued to 2,784,000 KRW this year when the pension begins.
Yang Jeongseok, team leader of the Pension Benefits Team at the Ministry of Health and Welfare, said, "By adjusting pension amounts to reflect revaluation of past income and inflation rates, we expect to guarantee the real value of pensions and provide some support to National Pension recipients during difficult times."
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