National Pension: Paying More Premiums but Receiving Less Benefits

Jeon Jin-suk "Reform Plan Causing Generational Conflict Must Be Withdrawn"

Jeon Jin-sook Assembly Member

Concerns have been raised that applying differentiated speeds of premium rate increases, as proposed in the government's pension reform plan, could create a structure where people at generational boundary ages (born in 1975, 1985, and 1995) pay more premiums but receive less pension benefits, potentially causing social confusion and intergenerational conflict.

On the 7th, Jeon Jin-sook, a member of the Democratic Party of Korea representing Gwangju Buk-gu Eul, analyzed data titled "Total Premiums, Total Pension Amounts, and Net Benefit Status by Birth Year According to Differentiated Speeds of Premium Rate Increases," submitted by the National Pension Service. The analysis confirmed that individuals at generational boundary ages bear higher premium burdens and experience reversals in net benefits (total pension amount minus total premiums).

Specifically, those born in 1975 are estimated to pay 2.52 million KRW more in total premiums than those born in 1974 but receive 7.5 million KRW less in net benefits. Similarly, those born in 1985 pay 1.44 million KRW more than those born in 1984 but receive 4.64 million KRW less in net benefits, and those born in 1995 pay 1.44 million KRW more than those born in 1994 while receiving 2.33 million KRW less in net benefits.

Conversely, there are cases where individuals pay less in premiums but receive increased net benefits. For example, those born in 1996 pay 1.36 million KRW less in total premiums than those born in 1995 but receive 560,000 KRW more in net benefits.

The government announced a plan to enhance fairness in premium burdens across generations by dividing the population into four age groups: those in their 50s, 40s, 30s, and 20s or younger, applying different speeds of premium rate increases for each group. The proposal includes raising the premium rate by 1 percentage point annually for those in their 50s, 0.5 percentage points for those in their 40s, 0.33 percentage points for those in their 30s, and 0.25 percentage points for those in their 20s.

However, this differentiated approach has caused issues where, for those at the generational boundaries?born in 1975, 1985, and 1995?a one-year age difference results in reversals in total premium amounts and net benefits.

Rep. Jeon stated, "We have confirmed that the 'differentiated speeds of premium rate increases,' which is being promoted with consideration for intergenerational fairness, actually creates generations that 'pay more and receive less.' We demand the immediate withdrawal of this pension reform plan that causes social confusion and intergenerational conflict."