'First Case in 37 Years of Receiving 3 Million Won Monthly from National Pension... The Secret Revealed'

Initial Enrollment with High Income Replacement Rate
Over 30 Years of Long-Term Subscription
Amount Increased by Deferring Pension for 5 Years

A National Pension recipient receiving more than 3 million KRW per month has appeared for the first time.

According to the National Pension Service on the 24th, among old-age pension recipients (the general form of National Pension received upon reaching the retirement age) in January this year, the first case of a monthly pension amount exceeding 3 million KRW has emerged. It has been 37 years since the National Pension system was introduced in 1988 that someone has received more than 3 million KRW per month.

This recipient has been enrolled since the implementation of the National Pension system, which had a so-called high 'income replacement rate,' and has been a long-term member for over 30 years, allowing the pension amount to exceed 3 million KRW per month due to the extended enrollment period. The income replacement rate is an indicator showing what percentage of the lifetime average income earned while working the National Pension can replace in old age. At the launch of the National Pension in 1988, it was high at 70% (based on 40 years of enrollment).

However, due to concerns about fund depletion caused by rapid aging, the first reform lowered the income replacement rate to 60% in 1998. Since the second reform in 2008, the rate has been decreasing by 0.5 percentage points annually from 60%, and over 20 years until 2028, it is scheduled to gradually fall to 40%. The income replacement rate in 2025 will be 41.5%.

Additionally, this recipient was able to increase the pension amount by utilizing the 'old-age pension deferral system.' The National Pension requires subscribers to pay premiums for at least 10 years (120 months) to secure the right to receive old-age pension benefits; the longer the enrollment period, the higher the premiums paid, and the higher the income replacement rate, the larger the pension amount received.

The pension deferral system allows delaying the start of old-age pension receipt in exchange for an increased pension amount. If the old-age pension beneficiary wishes, they can delay receiving the pension for up to 5 years (up to age 70 depending on birth year) without paying additional premiums, and choose to defer receiving all or part of the pension amount (options include 50%, 60%, 70%, 80%, 90%, etc.). This system was introduced in July 2007.

The pension amount increases by 7.2% annually (0.6% monthly) depending on the deferral period. However, applying for pension deferral is not always advantageous. While delaying receipt increases the amount, the shortened receipt period may reduce the total final pension amount.